AES Reports Strong Execution on Strategic Priorities

¹ Through asset sales, fuel conversions and retirements, while maintaining reliability and affordability, and subject to necessary approvals.

²  Adjusted EPS is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EPS and a description of the adjustments to reconcile Adjusted EPS to Diluted EPS for the quarter and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.

³ Adjusted EBITDA is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EBITDA and a description of the adjustments to reconcile Adjusted EBITDA to Net Income for the quarter and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.

⁴ Pre-tax effect of Production Tax Credits, Investment Tax Credits, and depreciation tax expense allocated to tax equity investors.

⁵ Adjusted EBITDA is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EBITDA and a description of the adjustments to reconcile Adjusted EBITDA to Net Income for the quarter and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.

⁶ Pre-tax effect of Production Tax Credits, Investment Tax Credits, and depreciation tax expense allocated to tax equity investors.

⁷ Adjusted EPS is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EPS and a description of the adjustments to reconcile Adjusted EPS to Diluted EPS for the quarter and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.

⁸ Through asset sales, fuel conversions and retirements, while maintaining reliability and affordability, and subject to necessary approvals.

⁹ Adjusted EBITDA is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EBITDA and a description of the adjustments to reconcile Adjusted EBITDA to Net Income for the quarter and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.

¹⁰ Adjusted EPS is a non-GAAP financial measure.  See attached "Non-GAAP Measures" for definition of Adjusted EPS and a description of the adjustments to reconcile Adjusted EPS to Diluted EPS for the quarter and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.

THE AES CORPORATION

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

(in millions, except per share amounts)

Revenue:

Non-Regulated

$           2,193

$      2,276

$           4,480

$           4,293

Regulated

834

802

1,786

1,637

Total revenue

3,027

3,078

6,266

5,930

Cost of Sales:

Non-Regulated

(1,782)

(1,781)

(3,579)

(3,398)

Regulated

(747)

(734)

(1,595)

(1,439)

Total cost of sales

(2,529)

(2,515)

(5,174)

(4,837)

Operating margin

498

563

1,092

1,093

General and administrative expenses

(72)

(46)

(127)

(98)

Interest expense

(310)

(279)

(640)

(537)

Interest income

131

95

254

170

Loss on extinguishment of debt

—

(1)

(1)

(7)

Other expense

(12)

(29)

(26)

(41)

Other income

14

70

24

76

Loss on disposal and sale of business interests

(4)

(2)

(4)

(1)

Asset impairment expense

(174)

(482)

(194)

(483)

Foreign currency transaction losses

(67)

(49)

(109)

(68)

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN

EARNINGS OF AFFILIATES

4

(160)

269

104

Income tax benefit (expense)

2

19

(70)

(41)

Net equity in earnings (losses) of affiliates

(25)

5

(29)

(28)

NET INCOME (LOSS)

(19)

(136)

170

35

Less: Net income attributable to noncontrolling interests and redeemable stock of

subsidiaries

(20)

(43)

(58)

(99)

NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION

$               (39)

$        (179)

$              112

$               (64)

BASIC EARNINGS PER SHARE:

NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON

STOCKHOLDERS

$            (0.06)

$       (0.27)

$             0.17

$            (0.10)

DILUTED EARNINGS PER SHARE:

NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON

STOCKHOLDERS

$            (0.06)

$       (0.27)

$             0.16

$            (0.10)

DILUTED SHARES OUTSTANDING

669

668

712

668

THE AES CORPORATION

Strategic Business Unit (SBU) Information

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(in millions)

2023

2022

2023

2022

REVENUE

 Renewables SBU

$                  541

$                  455

$               1,036

$                  875

 Utilities SBU

852

821

1,823

1,680

 Energy Infrastructure SBU

1,654

1,820

3,378

3,427

 New Energy Technologies SBU

1

2

75

2

 Corporate and Other

40

34

67

57

 Eliminations

(61)

(54)

(113)

(111)

 Total Revenue

$               3,027

$               3,078

$               6,266

$               5,930

THE AES CORPORATION

Condensed Consolidated Balance Sheets (Unaudited)

June 30, 2023

December 31,
2022

(in millions, except share

and per share data)

ASSETS

CURRENT ASSETS

 Cash and cash equivalents

$                 1,322

$                 1,374

 Restricted cash

517

536

 Short-term investments

713

730

 Accounts receivable, net of allowance for doubtful accounts of $8 and $5, respectively

1,710

1,799

 Inventory

774

1,055

 Prepaid expenses

218

98

 Other current assets

1,449

1,533

 Current held-for-sale assets

502

518

  Total current assets

7,205

7,643

NONCURRENT ASSETS

Property, Plant and Equipment:

 Land

490

470

 Electric generation, distribution assets and other

27,312

26,599

 Accumulated depreciation

(8,413)

(8,651)

 Construction in progress

6,688

4,621

  Property, plant and equipment, net

26,077

23,039

Other Assets:

 Investments in and advances to affiliates

858

952

 Debt service reserves and other deposits

171

177

 Goodwill

362

362

 Other intangible assets, net of accumulated amortization of $475 and $434, respectively

2,282

1,841

 Deferred income taxes

383

319

 Loan receivable, net of allowance of $25 and $26,  respectively

1,018

1,051

 Other noncurrent assets, net of allowance of $21 and $51, respectively

3,149

2,979

  Total other assets

8,223

7,681

TOTAL ASSETS

$               41,505

$               38,363

LIABILITIES AND EQUITY

CURRENT LIABILITIES

 Accounts payable

$                 1,583

$                 1,730

 Accrued interest

303

249

 Accrued non-income taxes

228

249

 Accrued and other liabilities

2,232

2,151

 Recourse debt

500

—

 Non-recourse debt, including $896 and $416, respectively, related to variable interest entities

2,445

1,758

 Current held-for-sale liabilities

337

354

  Total current liabilities

7,628

6,491

NONCURRENT LIABILITIES

Recourse debt

4,976

3,894

Non-recourse debt, including $2,032 and $2,295, respectively, related to variable interest entities

18,622

17,846

Deferred income taxes

1,104

1,139

Other noncurrent liabilities

3,128

3,168

Total noncurrent liabilities

27,830

26,047

Commitments and Contingencies

Redeemable stock of subsidiaries

1,289

1,321

EQUITY

THE AES CORPORATION STOCKHOLDERS' EQUITY

Preferred stock (without par value, 50,000,000 shares authorized; 1,043,050 issued and outstanding at June 30, 2023

and December 31, 2022)

838

838

Common stock ($0.01 par value, 1,200,000,000 shares authorized; 818,808,272 issued and 669,385,716 outstanding at

June 30, 2023 and 818,790,001 issued and 668,743,464 outstanding at December 31, 2022)

8

8

Additional paid-in capital

6,550

6,688

Accumulated deficit

(1,523)

(1,635)

Accumulated other comprehensive loss

(1,567)

(1,640)

Treasury stock, at cost (149,422,556 and 150,046,537 shares at June 30, 2023 and December 31, 2022, respectively)

(1,814)

(1,822)

Total AES Corporation stockholders' equity

2,492

2,437

NONCONTROLLING INTERESTS

2,266

2,067

Total equity

4,758

4,504

TOTAL LIABILITIES AND EQUITY

$               41,505

$               38,363

THE AES CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

(in millions)

(in millions)

OPERATING ACTIVITIES:

Net income

$             (19)

$           (136)

$            170

$              35

Adjustments to net income:

 Depreciation and amortization

277

264

550

534

 Loss on disposal and sale of business interests

4

2

4

1

 Impairment expense

179

482

199

483

 Deferred income taxes

(108)

(36)

(119)

(43)

 Loss on extinguishment of debt

—

1

1

7

 Loss (gain) of affiliates, net of dividends

25

19

29

52

 Emissions allowance expense

50

121

139

239

 Loss on realized/unrealized foreign currency

38

57

71

20

 Other

81

(63)

99

28

Changes in operating assets and liabilities:

 (Increase) decrease in accounts receivable

122

(185)

60

(262)

 (Increase) decrease in inventory

85

(183)

276

(227)

 (Increase) decrease in prepaid expenses and other current assets

7

(246)

71

(187)

 (Increase) decrease in other assets

24

104

74

94

 Increase (decrease) in accounts payable and other current liabilities

(12)

275

(305)

151

 Increase (decrease) in income tax payables, net and other tax payables

(78)

(121)

(85)

(114)

 Increase (decrease) in deferred income

21

49

42

59

 Increase (decrease) in other liabilities

(134)

4

(89)

(5)

Net cash provided by operating activities

562

408

1,187

865

INVESTING ACTIVITIES:

Capital expenditures

(1,845)

(893)

(3,396)

(1,659)

Acquisitions of business interests, net of cash and restricted cash acquired

(290)

(107)

(290)

(107)

Proceeds from the sale of business interests, net of cash and restricted cash sold

—

—

98

1

Sale of short-term investments

350

148

706

345

Purchase of short-term investments

(202)

(349)

(620)

(694)

Contributions and loans to equity affiliates

(92)

(76)

(112)

(169)

Purchase of emissions allowances

(37)

(157)

(115)

(293)

Other investing

(10)

4

(21)

(7)

Net cash used in investing activities

(2,126)

(1,430)

(3,750)

(2,583)

FINANCING ACTIVITIES:

Borrowings under the revolving credit facilities and commercial paper program

14,381

1,907

16,716

3,100

Repayments under the revolving credit facilities and commercial paper program

(14,184)

(1,554)

(15,809)

(2,269)

Issuance of recourse debt

900

—

1,400

—

Repayments of recourse debt

—

—

—

(29)

Issuance of non-recourse debt

767

1,422

1,457

3,132

Repayments of non-recourse debt

(284)

(681)

(944)

(1,469)

Payments for financing fees

(49)

(11)

(67)

(38)

Purchases under supplier financing arrangements

289

80

818

173

Repayments of obligations under supplier financing arrangements

(275)

(84)

(862)

(134)

Distributions to noncontrolling interests

(100)

(46)

(147)

(93)

Acquisitions of noncontrolling interests

(1)

(5)

(1)

(540)

Contributions from noncontrolling interests

—

20

18

28

Sales to noncontrolling interests

189

181

189

229

Issuance of preferred shares in subsidiaries

—

—

3

60

Dividends paid on AES common stock

(111)

(106)

(222)

(211)

Payments for financed capital expenditures

(3)

(5)

(7)

(9)

Other financing

(6)

(12)

(13)

(6)

Net cash provided by financing activities

1,513

1,106

2,529

1,924

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(19)

(38)

(37)

(18)

Increase in cash, cash equivalents and restricted cash of held-for-sale businesses

3

43

(6)

(21)

Total increase (decrease) in cash, cash equivalents and restricted cash

(67)

89

(77)

167

Cash, cash equivalents and restricted cash, beginning

2,077

1,562

2,087

1,484

Cash, cash equivalents and restricted cash, ending

$         2,010

$         1,651

$         2,010

$         1,651

SUPPLEMENTAL DISCLOSURES:

Cash payments for interest, net of amounts capitalized

$            260

$            238

$            512

$            423

Cash payments for income taxes, net of refunds

147

95

200

141

SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Initial recognition of contingent consideration for acquisitions (see Note 17)

$            218

—

218

15

Non-cash contributions from noncontrolling interests

$              30

—

30

—

Three Months Ended June 30,

Six Months Ended June 30,

Reconciliation of Adjusted EBITDA (in millions)

2023

2022

2023

2022

Net income (loss)

$                 (19)

$            (136)

$                 170

$                  35

Income tax expense (benefit)

(2)

(19)

70

41

Interest expense

310

279

640

537

Interest income

(131)

(95)

(254)

(170)

Depreciation and amortization

277

264

550

534

EBITDA

$                435

$             293

$              1,176

$                977

Less: Adjustment for noncontrolling interests and redeemable stock of subsidiaries ⁽¹⁾

(155)

(156)

(325)

(312)

Less: Income tax expense (benefit), interest expense (income) and depreciation and

amortization from equity affiliates

27

23

66

57

Interest income recognized under service concession arrangements

18

20

36

39

Unrealized derivative and equity securities losses (gains)

32

(34)

(7)

8

Unrealized foreign currency losses

32

38

64

20

Disposition/acquisition losses

16

23

13

32

Impairment losses

164

479

173

480

Loss on extinguishment of debt

—

—

1

6

Adjusted EBITDA

$                569

$             686

$              1,197

$             1,307

Tax attributes allocated to tax equity investors

38

36

51

49

Adjusted EBITDA with Tax Attributes ⁽²⁾

$                607

$             722

$              1,248

$             1,356

⁽¹⁾

The allocation of earnings to tax equity investors from both consolidated entities and equity affiliates is removed from Adjusted EBITDA.

⁽²⁾

Adjusted EBITDA with Tax Attributes includes the impact of the share of the ITCs, PTCs, and depreciation expense allocated to tax equity investors under the HLBV accounting method and recognized as Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries on the Condensed Consolidated Statements of Operations. All of the tax attributes are related to the Renewables SBU.

Three Months Ended
June 30, 2023

Three Months Ended
June 30, 2022

Six Months Ended
June 30, 2023

Six Months Ended
June 30, 2022

Net of NCI
⁽¹⁾

Per Share
(Diluted)
Net of NCI
⁽¹⁾

Net of NCI
⁽¹⁾

Per Share
(Diluted)
Net of NCI
⁽¹⁾

Net of NCI
⁽¹⁾

Per Share
(Diluted)
Net of NCI
⁽¹⁾

Per Share
(Diluted)
Net of NCI
⁽¹⁾

(in millions, except per share amounts)

Income from continuing operations,

net of tax, attributable to AES and

Diluted EPS

$      (39)

$   (0.05)

$    (179)

$   (0.25)

$     112

$     0.16

$       (64)

$    (0.09)

Add: Income tax expense from

continuing operations attributable to AES

(16)

(29)

35

21

Pre-tax contribution

$      (55)

$    (208)

$     147

$       (43)

Adjustments

Unrealized derivative and equity securities losses (gains)

$       33

$    0.05

⁽²⁾

$      (35)

$   (0.05)

⁽³⁾

$        (6)

$    (0.01)

⁽⁴⁾

$          6

$     0.01

Unrealized foreign currency losses

33

0.04

⁽⁵⁾

39

0.05

⁽⁶⁾

64

0.09

⁽⁷⁾

20

0.03

Disposition/acquisition losses

16

0.02

23

0.03

⁽⁸⁾

13

0.02

32

0.04

⁽⁸⁾

Impairment losses

164

0.23

⁽⁹⁾

479

0.68

⁽¹⁰⁾

173

0.24

⁽⁹⁾

480

0.68

⁽¹⁰⁾

Loss on extinguishment of debt

—

—

6

0.01

4

0.01

16

0.02

Less: Net income tax benefit

(0.08)

⁽¹¹⁾

(0.13)

⁽¹²⁾

(0.08)

⁽¹¹⁾

(0.14)

⁽¹²⁾

Adjusted PTC and Adjusted EPS

$     191

$    0.21

$     304

$    0.34

$     395

$     0.43

$      511

$     0.55

⁽¹⁾

NCI is defined as Noncontrolling Interests.

⁽²⁾

Amount primarily relates to recognition of unrealized losses due to the termination of a PPA of $72 million, or $0.10 per share, partially offset by unrealized derivative gains at the Energy Infrastructure SBU of $37 million, or $0.05 per share.

⁽³⁾

Amount primarily relates to the unrealized gain on remeasurement of our existing investment in 5B, accounted for using the measurement alternative, of $26 million, or $0.04 per share.

⁽⁴⁾

Amount primarily relates to unrealized derivative gains at the Energy Infrastructure SBU of $87 million, or $0.12 per share, partially offset by the recognition of unrealized losses due to the termination of a PPA of $72 million, or $0.10 per share.

⁽⁵⁾

Amount primarily relates to unrealized foreign currency losses mainly associated with the devaluation of long-term receivables denominated in Argentine pesos of $24 million, or $0.03 per share, and unrealized foreign currency losses at AES Andes due to the depreciating Colombian peso of $15 million, or $0.02 per share.

⁽⁶⁾

Amount primarily relates to unrealized foreign currency losses on debt in Brazil of $12 million, or $0.02 per share, and unrealized foreign currency losses of $9 million, or $0.01 per share, mainly associated with the devaluation of long-term receivables denominated in Argentine pesos.

⁽⁷⁾

Amount primarily relates to unrealized foreign currency losses mainly associated with the devaluation of long-term receivables denominated in Argentine pesos of $49 million, or $0.07 per share, and unrealized foreign currency losses at AES Andes due to the depreciating Colombian peso of $31 million, or $0.04 per share.

⁽⁸⁾

Amount primarily relates to the recognition of an allowance on the AES Gilbert sales-type lease receivable as a cost of disposition of a business interest of $20 million, or $0.03 per share, for the three and six months ended June 30, 2022.

⁽⁹⁾

Amount primarily relates to asset impairments at the Norgener coal-fired plant in Chile of $136 million, or $0.19 per share, and the GAF Projects at AES Renewable Holdings of $18 million, or $0.03 per share for the three and six months ended June 30, 2023.

⁽¹⁰⁾

Amount primarily relates to asset impairment at Maritza of $475 million, or $0.67 per share, for the three and six months ended June 30, 2022.

⁽¹¹⁾

Amount primarily relates to income tax benefits associated with the asset impairment at the Norgener coal fired plant in Chile of $33 million, or $0.05 per share, and income tax benefits associated with the recognition of unrealized losses due to the termination of a PPA of $18 million, or $0.02 per share, for the three and six months ended June 30, 2023.

⁽¹²⁾

Amount primarily relates to income tax benefits associated with the impairment at Maritza of $110 million, or $0.15 per share, partially offset by income tax expense associated with the unrealized gain on remeasurement of our existing investment in 5B of $6 million, or $0.01 per share for the three and six months ended June 30, 2022.

The AES Corporation

Parent Financial Information

Parent only data: last four quarters

(in millions)

4 Quarters Ended

Total subsidiary distributions & returns of capital to Parent

June 30, 2023

March 31, 2023

December 31, 2022

September 30, 2022

Actual

Actual

Actual

Actual

Subsidiary distributions¹ to Parent & QHCs

$             1,383

$             1,489

$             1,298

$            1,022

Returns of capital distributions to Parent & QHCs

56

56

—

1

Total subsidiary distributions & returns of capital to Parent

$             1,439

$             1,545

$             1,298

$            1,023

Parent only data: quarterly

(in millions)

Quarter Ended

Total subsidiary distributions & returns of capital to Parent

June 30, 2023

March 31, 2023

December 31, 2022

September 30, 2022

Actual

Actual

Actual

Actual

Subsidiary distributions¹ to Parent & QHCs

$                205

$                356

$                753

$                 69

Returns of capital distributions to Parent & QHCs

—

56

—

—

Total subsidiary distributions & returns of capital to Parent

$                205

$                412

$                753

$                 69

(in millions)

Balance at

June 30, 2023

March 31, 2023

December 31, 2022

September 30, 2022

Parent Company Liquidity²

Actual

Actual

Actual

Actual

Cash at Parent & Cash at QHCs³

$                  35

$                117

$                  24

$                 49

Availability under credit facilities

883

970

1,141

374

Ending liquidity

$                918

$             1,087

$             1,165

$               423

⁽¹⁾

Subsidiary distributions received by Qualified Holding Companies ("QHCs") excluded from Schedule 1. Subsidiary Distributions should not be construed as an alternative to Consolidated Net Cash Provided by Operating Activities, which is determined in accordance with US GAAP. Subsidiary Distributions are important to the Parent Company because the Parent Company is a holding company that does not derive any significant direct revenues from its own activities but instead relies on its subsidiaries' business activities and the resultant distributions to fund the debt service, investment and other cash needs of the holding company. The reconciliation of the difference between the Subsidiary Distributions and Consolidated Net Cash Provided by Operating Activities consists of cash generated from operating activities that is retained at the subsidiaries for a variety of reasons which are both discretionary and non-discretionary in nature. These factors include, but are not limited to, retention of cash to fund capital expenditures at the subsidiary, cash retention associated with non-recourse debt covenant restrictions and related debt service requirements at the subsidiaries, retention of cash related to sufficiency of local GAAP statutory retained earnings at the subsidiaries, retention of cash for working capital needs at the subsidiaries, and other similar timing differences between when the cash is generated at the subsidiaries and when it reaches the Parent Company and related holding companies.

⁽²⁾

Parent Company Liquidity is defined as cash available to the Parent Company, including cash at qualified holding companies (QHCs), plus available borrowings under our existing credit facility. AES believes that unconsolidated Parent Company liquidity is important to the liquidity position of AES as a Parent Company because of the non-recourse nature of most of AES' indebtedness.

⁽³⁾

The cash held at QHCs represents cash sent to subsidiaries of the company domiciled outside of the US. Such subsidiaries have no contractual restrictions on their ability to send cash to AES, the Parent Company. Cash at those subsidiaries was used for investment and related activities outside of the US. These investments included equity investments and loans to other foreign subsidiaries as well as development and general costs and expenses incurred outside the US. Since the cash held by these QHCs is available to the Parent, AES uses the combined measure of subsidiary distributions to Parent and QHCs as a useful measure of cash available to the Parent to meet its international liquidity needs.