AES CORP

Previous wording

•the risk that the conditions to the completion of the Transaction, including obtaining required Stockholder and regulatory approvals, are not satisfied in a timely manner or at all;

Current wording

•the risk that the conditions to the completion of the Transaction are not satisfied in a timely manner or at all;

Previous wording

Compared with last year, first quarter net income increased $348 million, from a net loss of $73 million to net income of $275 million. This increase is the result of higher contributions from development services in the U.S., higher retail margin and transmission and rider revenues at AES Ohio and AES Indiana, income tax benefit in the current year compared to income tax expense in the prior year, one-time costs in the prior year and lower costs in the current year due to the Company’s restructuring program in February 2025, and lower impairment expense.

Current wording

Compared with last year, net income for the six months ended June 30, 2026 increased $885 million, from a net loss of $223 million to net income of $662 million. This increase is the result of higher contributions from development services and the favorable impact of energy derivatives in the U.S., higher retail margin and transmission and rider revenues at AES Ohio and AES Indiana, higher energy and capacity sales and prices in the spot market, losses on commencement of sales-type leases recognized in the prior year at AES Clean Energy Development, income tax benefit in the current year compared to income tax expense in the prior year, one-time costs in the prior year due to the Company’s restructuring program in February 2025, and a gain on sale of shares in Fluence; partially offset by the prior-year impact of derecognition of a valuation allowance on the loan receivable upon reclassifying Mong Duong from held-for-sale to held and used and lower contract sales volume and higher depreciation mainly due to the expiration of the Maritza PPA in Bulgaria.

Previous wording

contributions from the Energy Infrastructure SBU primarily due to higher energy and capacity sales and prices in the spot market and the increase in ownership of Cochrane, and higher retail margin at AES Ohio and AES Indiana; partially offset by the impact of the AES Ohio and AGIC selldowns.

Current wording

Adjusted EBITDA, a non-GAAP measure, increased $453 million, from $1,272 million to $1,725 million for the six months ended June 30, 2026, driven by higher contributions from development services in the U.S., higher energy and capacity sales and prices in the spot market, the increase in ownership of Cochrane, and higher retail margin and transmission and rider revenues at AES Ohio and AES Indiana; partially offset by the impact of the AES Ohio and AGIC selldowns in the prior year and lower contract sales volume mainly due to the expiration of the Maritza PPA in Bulgaria.

Previous wording

Consolidated Revenue — Revenue increased $254 million, or 9%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, driven by:

Current wording

Consolidated Revenue — Revenue increased $567 million, or 20%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, driven by:

Previous wording

•$154 million at Renewables mainly driven by $63 million due to development services in the U.S., $37 million due to new projects placed in service mainly in the U.S, $19 million higher revenues under our retail supply agreements, a $17 million favorable impact from changes in mark-to-market of energy derivatives in the U.S., and $16 million due to higher contracted and spot sales in Chile;

Current wording

•$295 million at Renewables mainly driven by a $76 million favorable impact from energy derivatives in the U.S., $67 million higher spot sales and prices in Colombia driven by El Niño, $63 million due to development services in the U.S., $53 million due to new projects placed in service in the U.S. and Chile, $27 million positive impact due to the appreciation of the Colombian peso, and $21 million higher revenues under our retail supply agreements; partially offset by $13 million lower contracted and spot sales in Chile;

Previous wording

•$78 million at Utilities mainly driven by $38 million due to higher retail rates as a result of AES Ohio’s 2024 DRC Settlement in November 2025, and a $37 million increase due to higher transmission and rider

Current wording

•$64 million at Utilities mainly driven by $38 million due to higher retail rates as a result of AES Ohio’s 2024 DRC Settlement in November 2025, and $35 million due to higher transmission and rider revenues; partially offset by a $10 million decrease in wholesale revenues at AES Indiana driven by lower load requirements and unit availability; and

Previous wording

•$37 million at Corporate, Other and Eliminations mainly driven by lower eliminations of inter-segment revenue.

Current wording

•$18 million at Corporate, Other and Eliminations mainly driven by lower eliminations of inter-segment revenue.

Previous wording

Consolidated Operating Margin — Operating margin increased $199 million, or 45%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, driven by:

Current wording

Consolidated Operating Margin — Operating margin increased $239 million, or 53%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, mainly due to higher margins at the Renewables SBU driven by favorable impacts from energy derivatives and contributions from development services in the U.S., as well as higher energy and capacity sales and prices in the spot market at the Energy Infrastructure SBU. The increase in operating margin was partially offset by lower contract sales volume mainly due to the expiration of the Maritza PPA in Bulgaria.

Previous wording

•$127 million at Utilities mainly driven by $63 million due to higher transmission and rider revenues, $46 million due to higher retail rates as a result of AES Ohio’s 2024 DRC Settlement in November 2025, and a $19 million increase in wholesale revenues at AES Indiana driven by higher load requirements and increased capacity from new renewables projects placed in service; and

Current wording

•$191 million at Utilities mainly driven by $92 million due to higher transmission and rider revenues, $84 million due to higher retail rates as a result of AES Ohio’s 2024 DRC Settlement in November 2025, and a $17 million increase in wholesale revenues at AES Indiana driven by higher load requirements and increased capacity from new renewables projects placed in service;

Previous wording

These favorable impacts were partially offset by a decrease of $64 million at Energy Infrastructure mainly driven by $146 million lower contracted sales volume and prices, and $8 million of prior year net derivative gains as part of our commercial hedging strategy; partially offset by $56 million of higher energy and capacity sales and prices in the spot market, and $34 million of higher LNG sales.

Current wording

•$126 million at Energy Infrastructure mainly driven by $201 million higher energy and capacity sales and prices in the spot market mainly in Argentina, $61 million of higher spot sales in Mexico driven by the expiration of a PPA, $61 million higher LNG sales, and $14 million of prior year net derivative losses as part of our commercial hedging strategy; partially offset by $207 million lower contract sales volume mainly driven by the expiration of the Maritza PPA in Bulgaria; and

Previous wording

•$22 million at Corporate, Other and Eliminations mainly driven by lower reinsurance program costs and lower reserve for losses at AGIC, and lower allocation of IT and other costs to the businesses; and

Current wording

•$55 million at Corporate, Other and Eliminations mainly driven by lower eliminations of inter-segment revenue, partially offset by lower charge-outs of IT and other costs to the businesses.

Previous wording

General and administrative expenses decreased $22 million, or 29%, to $55 million for the three months ended March 31, 2026, compared to $77 million for the three months ended March 31, 2025, primarily due to a $20 million decrease in business development costs, $8 million of one-time costs, and $4 million lower people costs, all driven by the Company's restructuring program in February 2025; partially offset by $11 million of costs related to the Merger.

Current wording

General and administrative expenses decreased $9 million, or 7%, to $117 million for the six months ended June 30, 2026, compared to $126 million for the six months ended June 30, 2025, primarily due to a $14 million decrease in business development costs and $9 million decrease in one-time costs, all driven by the Company's restructuring program in February 2025, as well as $6 million lower professional fees; partially offset by $22 million of costs related to the Merger.

Previous wording

Interest expense increased $11 million, or 3%, to $353 million for the three months ended March 31, 2026, compared to $342 million for the three months ended March 31, 2025. This increase is primarily due to higher interest expense at the Parent Company due to a higher weighted average interest rate and debt balance as well as the impact of a prior year realized gain on a de-designated interest rate swap, and lower capitalized interest at the Renewables SBU due to fewer projects under construction; partially offset by lower debt balances at the Energy Infrastructure SBU and Renewables SBU.

Current wording

Interest expense increased $27 million, or 4%, to $721 million for the six months ended June 30, 2026, compared to $694 million for the six months ended June 30, 2025. This increase is primarily due to higher interest expense at the Parent Company due to a higher weighted average interest rate and debt balance as well as the impact of a prior year realized gain on a de-designated interest rate swap, and lower capitalized interest at the Renewables SBU due to fewer projects under construction; partially offset by lower debt balances at the Energy Infrastructure SBU.

Previous wording

Asset impairment expense decreased $37 million, or 76%, to $12 million for the three months ended March 31, 2026, compared to $49 million for the three months ended March 31, 2025. The decrease was due to lower impairment expense of $25 million at AES Clean Energy Development due to the write-off of project development intangibles and capitalized development costs for projects that were determined to be no longer viable and a prior year impairment of $17 million at Mong Duong associated with the held-for-sale classification due to the carrying amount of the Mong Duong disposal group exceeding the expected sales proceeds.

Current wording

Asset impairment expense increased $184 million to $30 million for the three months ended June 30, 2026, compared to a $154 million reversal for the three months ended June 30, 2025. This increase was primarily the result of a $243 million increase in the carrying value of the Mong Duong asset group in the prior year due to the derecognition of a valuation allowance on the loan receivable accounted for under ASC 310 and the elimination of net estimated costs to sell upon reclassifying Mong Duong from held-for-sale to held and used. This was partially offset by lower impairment expense of $54 million at AES Clean Energy Development due to the write-off of project development intangibles and capitalized development costs for projects that were determined to be no longer viable, mainly driven by $51 million in the prior year due to the right sizing of our development company as part of the restructuring program initiated in February 2025.

Previous wording

(1)Includes losses of $9 million and $3 million on foreign currency derivative contracts for the three months ended March 31, 2026 and 2025, respectively.

Current wording

(1)Includes losses of $36 million and $12 million on foreign currency derivative contracts for the three months ended June 30, 2026 and 2025, respectively, and losses of $45 million and $14 million on foreign currency derivative contracts for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

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 the depreciation of the Chilean peso.

Current wording

The Company recognized net foreign currency transaction losses of $28 million and $38 million for the three and six months ended June 30, 2025, respectively, primarily driven by unrealized losses due to the appreciation of the Chilean peso and unrealized losses on forwards and options in Euros.

Previous wording

Income tax benefit was $41 million for the three months ended March 31, 2026, compared to income tax expense of $17 million for the three months ended March 31, 2025. The Company’s effective tax rates were (17)% and (77)% for the three months ended March 31, 2026 and 2025, respectively. The current quarter effective tax rate was impacted by the benefit associated with ITCs, partially offset by tax expense resulting from allocations of losses to tax equity investors on renewables projects.

Current wording

Income tax benefit was $13 million for the six months ended June 30, 2026, compared to income tax expense of $184 million for the six months ended June 30, 2025. The Company’s effective tax rates were (2)% and 1,082% for the six months ended June 30, 2026 and 2025, respectively. The 2026 effective tax rate was impacted by the benefits associated with ITCs and the Fluence sell-down transaction, partially offset by tax expense resulting from allocations of losses to tax equity investors on renewables projects.

Previous wording

Net equity in losses of affiliates decreased $26 million, or 76%, to $8 million for the three months ended March 31, 2026, compared to $34 million for the three months ended March 31, 2025. This decrease was primarily driven by higher earnings from Enadom, as well as lower losses from Uplight after equity method accounting was suspended in the fourth quarter of 2025.

Current wording

Net equity in losses of affiliates decreased $14 million, or 25%, to $42 million for the six months ended June 30, 2026, compared to $56 million for the six months ended June 30, 2025. This decrease was primarily driven by lower losses from Uplight of $16 million after equity method accounting was suspended in the fourth quarter of 2025 and $10 million from sPower due to lower interest expense, as well as higher earnings from Fluence of $6 million driven by an increase in the volume of products fulfilled, partially offset by a $22 million impact at Gatun due to current year debt extinguishment costs.

Previous wording

Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries increased $93 million to $212 million for the three months ended March 31, 2026, compared to $119 million for the three months ended March 31, 2025. This increase was primarily due to an increase of $153 million at AES Clean Energy primarily attributable to higher allocation of losses to tax equity investors on projects placed in service and a $9 million impact due to the acquisition of the remaining shares of Cochrane, partially offset by a decrease of $23 million at AES Indiana primarily related to higher allocation of losses to tax equity investors for the Pike County BESS project in the prior year, and impacts of $13 million from the AES Ohio selldown, $9 million from the AGIC selldown, and $7 million at Mong Duong primarily due to a prior-year impairment.

Current wording

•Lower income of $13 million due to the acquisition of the remaining shares of Cochrane; and

Previous wording

•Higher income tax benefit of $66 million due to a lower effective tax rate;

Current wording

•Lower income tax expense of $140 million due to a lower effective tax rate;

Previous wording

•Higher margins from the Renewables SBU of $53 million, excluding one-time restructuring costs in the prior year, primarily due to increases from development services in the U.S., higher contracted margin in Chile and Colombia, and net favorable impact from changes in mark-to-market of energy derivatives in the U.S., partially offset by lower spot prices in Colombia;

Current wording

•Higher margins from the Renewables SBU of $180 million, excluding one-time restructuring costs in the prior year, primarily due to increases from development services in the U.S., net favorable impact from changes in energy derivatives in the U.S, higher spot sales and prices driven by El Niño partially offset by lower contracted energy margin in Colombia, and appreciation of the Colombian peso; partially offset by higher depreciation;

Previous wording

•Higher contributions from renewables projects placed in service of $182 million;

Current wording

•Higher contributions from renewables projects placed in service of $113 million;

Previous wording

•Higher margins from the Energy Infrastructure SBU of $12 million, excluding one-time restructuring costs in the prior year, primarily due to higher energy and capacity sales and prices in the spot market, higher net derivative gains, and higher LNG sales, partially offset by higher depreciation at Maritza due to the useful life reassessment in the prior year and lower contracted capacity and contract prices; and

Current wording

•Higher margins from the Energy Infrastructure SBU of $75 million, excluding one-time restructuring costs in the prior year, primarily due to higher energy and capacity sales and prices in the spot market, higher net derivative gains, and higher LNG sales, partially offset by lower contract sales volume at Maritza due to the PPA expiration and higher depreciation at Maritza due to the useful life reassessment in the prior year;

Previous wording

•Higher margins from the Utilities SBU of $44 million, excluding one-time restructuring costs in the prior year, primarily due to the 2024 DRC Settlement and higher transmission revenues at AES Ohio and higher rider revenues at AES Indiana;

Current wording

•Higher margins from the Utilities SBU of $62 million, excluding one-time restructuring costs in the prior year, primarily due to the 2024 DRC Settlement and higher transmission revenues at AES Ohio and higher rider revenues at AES Indiana; partially offset by higher property taxes;

Previous wording

•Lower net equity in losses of affiliates of $23 million primarily related to the suspension of equity method accounting at Uplight in the fourth quarter of 2025 and higher earnings at Enadom;

Current wording

•Lower net equity in losses of affiliates of $18 million primarily related to the suspension of equity method accounting at Uplight in the fourth quarter of 2025.

Previous wording

•Lower income of $20 million due to allocations of earnings to noncontrolling interest holders under profit-sharing arrangements based on stated internal rates of return.

Current wording

•Lower income of $30 million due to allocations of earnings to noncontrolling interest holders under profit-sharing arrangements based on stated internal rates of return.

Previous wording

Beginning in the first quarter of 2026, the Company no longer discloses Adjusted EPS or Adjusted EBITDA with Tax Attributes. Both metrics are subject to significant variability in the effect of Production Tax Credits (“PTCs”), Investment Tax Credits (“ITCs”), and depreciation tax deductions allocated to tax equity investors, as well as the tax benefit recorded from tax credits retained or transferred to third parties. As a result, the Company determined that these metrics are no longer as relevant to investors and Adjusted EBITDA better reflects the underlying business performance of the Company and is the most relevant measure considered in the Company’s internal evaluation of the financial performance of its segments.

Current wording

Beginning in the first quarter of 2026, the Company no longer discloses Adjusted EPS or Adjusted EBITDA with Tax Attributes. Both metrics are subject to significant variability related to the effect of Production Tax Credits (“PTCs”), Investment Tax Credits (“ITCs”), and depreciation tax deductions allocated to tax equity investors, as well as the tax benefit recorded from tax credits retained or transferred to third parties. As a result, the Company determined that these metrics are no longer as relevant to investors and Adjusted EBITDA better reflects the underlying business performance of the Company and is the most relevant measure considered in the Company’s internal evaluation of the financial performance of its segments.

Previous wording

On March 1, 2026, the Company entered into the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger. See Note 1—Financial Statement Presentation—Proposed Merger included in Item 1.—Financial Statements of this Form 10-Q for further information. During the first quarter of 2026, the Company updated the definitions of Adjusted EBITDA and Adjusted PTC to exclude costs directly associated with the Merger, including but not limited to, advisory, legal, and employee-related costs. This discrete, strategic transaction would result in significant incremental costs above normal operations, and the inclusion of such costs would result in a lack of comparability in our results of operations and could be misleading to investors. We believe excluding these costs associated with the Merger better reflects the underlying business performance of the Company.

Current wording

Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger. See Note 1—Financial Statement Presentation—Proposed Merger included in Item 1.—Financial Statements of this Form 10-Q for further information. During the first quarter of 2026, the Company updated the definitions of Adjusted EBITDA and Adjusted PTC to exclude costs directly associated with the Merger, including but not limited to, advisory, legal, and employee-related costs. This discrete, strategic transaction would result in significant incremental costs above normal operations, and the inclusion of such costs would result in a lack of comparability in our results of operations and could be misleading to investors. We believe excluding these costs associated with the Merger better reflects the underlying business performance of the Company.

Previous wording

Operating Margin for the three months ended March 31, 2026 increased $90 million, primarily driven by $55 million due to development services in the U.S., $29 million of higher contracted margin in Chile and Colombia, a $17 million favorable impact from changes in mark-to-market of energy derivatives in the U.S., and $16 million due to one-time restructuring costs incurred in the prior year; partially offset by a $17 million impact from lower spot prices in Colombia.

Current wording

Operating Margin for the six months ended June 30, 2026 increased $252 million, primarily driven by $123 million due to development services in the U.S., a $93 million favorable impact from energy derivatives in the U.S., $27 million higher spot sales and prices driven by El Niño, partially offset by lower contracted energy margin in Colombia, $17 million due to one-time restructuring costs incurred in the prior year, and $15 million positive impact due to the appreciation of the Colombian peso; partially offset by $36 million due to higher depreciation.

Previous wording

Adjusted EBITDA for the three months ended March 31, 2026 increased $108 million, primarily due to the drivers above, adjusted for NCI, unrealized derivatives, restructuring costs, and depreciation and amortization.

Current wording

Adjusted EBITDA for the six months ended June 30, 2026 increased $237 million, primarily due to the drivers above, adjusted for NCI, unrealized derivatives, restructuring costs, and depreciation and amortization.

Previous wording

Operating Margin for the three months ended March 31, 2026 increased $78 million, primarily driven by $38 million due to higher retail rates as a result of AES Ohio’s 2024 DRC Settlement in November 2025, including the impact of certain riders now incorporated into base rates, and a $37 million increase due to higher transmission and rider revenues.

Current wording

Operating Margin for the three months ended June 30, 2026 increased $22 million, primarily driven by $38 million due to higher retail rates as a result of AES Ohio’s 2024 DRC Settlement in November 2025, including the impact of certain riders now incorporated into base rates. This increase was partially offset by a $15 million increase in fixed costs mainly driven by higher property taxes due to higher assessed values.

Previous wording

Adjusted PTC for the three months ended March 31, 2026 increased $38 million due to the drivers above.

Current wording

Adjusted PTC for the three months ended June 30, 2026 increased $29 million due to the drivers above.

Previous wording

Adjusted EBITDA for the three months ended March 31, 2026 increased $46 million, primarily due to the drivers above and adjusted for NCI, including the impact of the AES Ohio selldown in the second quarter of 2025.

Current wording

Adjusted EBITDA for the six months ended June 30, 2026 increased $67 million, primarily due to the drivers above and adjusted for NCI, including the impact of the AES Ohio selldown in the second quarter of 2025.

Previous wording

Adjusted EBITDA for the three months ended March 31, 2026 increased $52 million, primarily due to the drivers above, adjusted for unrealized derivatives and restructuring costs, as well as higher depreciation at Maritza due to the useful life reassessment in the prior year and the increase in ownership of Cochrane.

Current wording

Adjusted EBITDA for the three months ended June 30, 2026 increased $63 million, primarily due to the drivers above, adjusted for unrealized derivatives, as well as higher depreciation at Maritza due to the useful life reassessment in the prior year, the increase in ownership of Cochrane, and higher equity earnings mainly at Gatun, excluding debt extinguishment costs.

Previous wording

Operating Margin for the three months ended March 31, 2026 increased $12 million, primarily driven by $29 million higher energy and capacity sales and prices in the spot market, $14 million lower fixed costs mainly due to the 2025 restructuring, $4 million due to higher net derivative gains, and $3 million driven by higher LNG sales; partially offset by $24 million of higher depreciation at Maritza due to the useful life reassessment in the prior year, and $13 million driven by lower contracted capacity and contract prices.

Current wording

Operating Margin for the six months ended June 30, 2026 increased $77 million, primarily driven by $127 million higher energy and capacity sales and prices in the spot market, $33 million due to higher net derivative gains, $20 million lower fixed costs mainly due to the 2025 restructuring, and $11 million driven by higher LNG sales; partially offset by $65 million driven by lower contract sales volume mainly due to the expiration of the Maritza PPA in Bulgaria, $39 million higher depreciation at Maritza due to the useful life reassessment in the prior year, and $14 million driven by lower availability.

Previous wording

Adjusted EBITDA for the three months ended March 31, 2026 increased $4 million, primarily due to lower losses from Uplight of $6 million after equity method accounting was suspended in the fourth quarter of 2025.

Current wording

Adjusted EBITDA for the six months ended June 30, 2026 increased $7 million, primarily due to lower losses from Uplight of $6 million after equity method accounting was suspended in the fourth quarter of 2025.

Previous wording

challenges described below and elsewhere in this section impact us more significantly than we currently anticipate, or if volatile foreign currencies and commodities move more unfavorably, then these adverse factors (or other adverse factors unknown to us) may have a material impact on our operating margin, net income attributable to The AES Corporation, and cash flows. We continue to monitor our operations and address challenges as they arise. For the risk factors related to our business, see Item 1.—Businessand Item 1A.—Risk Factors of our 2025 Form 10-K.

Current wording

During 2026 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, or if volatile foreign currencies and commodities move more unfavorably, then these adverse factors (or other adverse factors unknown to us) may have a material impact on our operating margin, net income attributable to The AES Corporation, and cash flows. We continue to monitor our operations and address challenges as they arise. For the risk factors related to our business, see Item 1.—Businessand Item 1A.—Risk Factors of our 2025 Form 10-K.

Previous wording

Trade Restrictions and Supply Chain— In April 2022, the U.S. Department of Commerce (“Commerce”) initiated an investigation into whether imports into the U.S. of solar cells and panels from Cambodia, Malaysia, Thailand, and Vietnam (“Southeast Asia”) were circumventing antidumping and countervailing duty (“AD/CVD”) orders on solar cells and panels from China. In August 2023, Commerce rendered final affirmative findings of circumvention with respect to all four countries, which resulted in the imposition of AD/CVD duties on certain imported cells and panels from Southeast Asia. Commerce’s determination and related matters remain the subject of ongoing litigation before the U.S. Court of Appeals for the Federal Circuit.

Current wording

Trade Restrictions and Supply Chain— In April 2022, the U.S. Department of Commerce (“Commerce”) initiated an investigation into whether imports into the U.S. of solar cells and panels from Cambodia, Malaysia, Thailand, and Vietnam (“Southeast Asia”) were circumventing antidumping and countervailing duty (“AD/CVD”) orders on solar cells and panels from China. In August 2023, Commerce rendered final affirmative findings of circumvention with respect to all four countries, which resulted in the imposition of AD/CVD duties on certain imported cells and panels from Southeast Asia. Commerce’s determination and related matters remain the subject of ongoing litigation before the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”).

Previous wording

The Trump Administration has threatened or imposed tariffs on a wide range of countries and products. On February 10, 2025, President Trump signed Executive Orders modifying existing tariffs under Section 232 of the Trade Expansion Act of 1962 ("Section 232") on steel and aluminum imports to expand their scope and impose 25% tariffs on both products. The President raised these rates to 50% effective June 4, 2025. At this time, we do not expect the modifications to tariffs on steel and aluminum to have a material impact on our business.

Current wording

The Trump Administration has threatened or imposed tariffs on a wide range of countries and products. On February 10, 2025, President Trump signed Executive Orders modifying existing tariffs under Section 232 of the Trade Expansion Act of 1962 ("Section 232") on steel and aluminum imports to expand their scope and impose 25% tariffs on both products. The President raised these rates to 50% effective June 4, 2025. Starting in August 2025, the President imposed Section 232 tariffs on imported copper products and copper-intensive derivative products. In April 2026, the President issued a new Proclamation applying a tariff rate of 50% on articles wholly of steel, aluminum, or copper, and a rate of 25% on derivative products substantially made of those metals, in each case assessed on the full customs value of the imported article. In June 2026, the President further adjusted these tariff regimes. At this time, we do not expect the modifications to tariffs on steel, aluminum, and copper will have a material impact on our business.

Previous wording

On February 1, 2025, President Trump issued an Executive Order declaring a national emergency under the International Emergency Economic Powers Act (“IEEPA”) with respect to U.S. importation of fentanyl and imposing tariffs on Mexico, Canada, and China. On April 2, 2025, President Trump issued an Executive Order pursuant to IEEPA imposing reciprocal tariffs on almost all goods imported into the U.S. In February 2026, on review of lower court decisions declaring the tariffs unlawful, the Supreme Court issued a decision holding that IEEPA does not authorize tariffs. In response, President Trump issued new 10% tariffs on almost all trading partners under Section 122 of the Trade Act of 1974, which will expire on or about July 24, 2026. In parallel, the Office of the U.S. Trade Representative (“USTR”) initiated an investigation under Section 301 concerning possible persistent trade surpluses and unused capacity with respect to China, the EU, South Korea, and certain other major trading partners. USTR also initiated a Section 301 investigation on 60 countries regarding potential failures to take action on forced labor. These investigations may result in tariffs under Section 301 when the Section 122 tariffs are due to expire. The impact of these Section 122 tariffs and potential Section 301 tariffs on the Company is uncertain.

Current wording

On February 1, 2025, President Trump issued an Executive Order declaring a national emergency under the International Emergency Economic Powers Act (“IEEPA”) with respect to U.S. importation of fentanyl and imposing tariffs on Mexico, Canada, and China. On April 2, 2025, the President issued an Executive Order pursuant to IEEPA imposing reciprocal tariffs on almost all goods imported into the U.S. In February 2026, on review of lower court decisions declaring the tariffs unlawful, the Supreme Court issued a decision holding that IEEPA does not authorize tariffs. In response, the President issued new 10% tariffs on almost all trading partners under Section 122 of the Trade Act of 1974, which expired on July 24, 2026. The Section 122 tariffs are currently under review by the Federal Circuit, following a May 2026 ruling from the CIT finding them to be unlawful. There has been no material impact on the Company from these Section 122 tariffs. In March 2026, the Office of the U.S. Trade Representative (“USTR”) initiated investigations under Section 301 concerning possible persistent trade surpluses and unused capacity with respect to China, the EU, South Korea, and certain other major trading partners. These investigations are ongoing. In March 2026, the USTR also initiated Section 301 investigations on 60 countries regarding potential failures to take action on forced labor. Effective July 24, 2026, the USTR imposed tariffs ranging from 10% to 12.5% stemming from the investigations concerning forced labor. The impact of these new and potential Section 301 tariffs on the Company is uncertain.