AES CORP (AES)·Q1 2025 Earnings Summary

Executive Summary

• AES delivered an in-line quarter operationally but missed Street consensus: Adjusted EPS was $0.27 vs S&P Global consensus ~$0.33, and revenue was $2.93B vs ~$3.05B; management reaffirmed full-year 2025 Adjusted EBITDA ($2.65–$2.85B), Adjusted EPS ($2.10–$2.26), and Adjusted EBITDA with Tax Attributes ($3.95–$4.35B) guidance . EPS/Revenue estimates from S&P Global noted below.*
• Drivers of the year-over-year decline were the roll-off of 2024 one-time benefits (Warrior Run PPA monetization), lower realized tax attributes timing, and restructuring costs; these were partly offset by higher Utilities and Renewables contributions .
• Strategic execution continued: backlog is 11.7 GW (5.3 GW under construction), 643 MW completed in Q1, 443 MW of new PPAs signed; asset sale proceeds target for 2025 achieved with $450M AGIC minority sale; financing actions addressed 2025 maturities (86% of $900M 2025 notes tendered) .
• Narrative catalysts: back-half weighted growth from 3.2 GW 2025 additions and $150M 2025 cost saves (ramping to >$300M in 2026), de minimis tariff exposure and safe-harbored U.S. backlog, and strong hyperscaler demand underpinning guidance .

What Went Well and What Went Wrong

• What Went Well

  • Guidance reaffirmed across all key metrics; management emphasized backlog conversion, Utilities rate base growth, and normalized LatAm results as 2025 drivers .
  • Utilities and Renewables momentum: Utilities revenue rose to $1.009B (+16% YoY), Renewables revenue to $666M (+4% YoY), and projects completed (643 MW) support 2025–2026 EBITDA growth .
  • Management de-risking actions: $450M AGIC stake sale met 2025 asset sale proceeds target; 86.25% of 2025 notes tendered (purchase price $995.97 per $1,000) reduces near-term refinancing risk .

• What Went Wrong

  • EPS and revenue missed S&P Global consensus as Adjusted EPS fell to $0.27 and revenue to $2.93B, vs ~$0.33 and ~$3.05B, respectively; GAAP diluted EPS fell to $0.07 (vs $0.60 in Q1’24) on roll-off of Warrior Run monetization, lower realized tax attributes, and restructuring costs . EPS/Revenue estimates from S&P Global noted below.*
  • Energy Infrastructure softness: segment revenue declined to $1.320B (from $1.609B), with consolidated operating margin down to $441M (from $619M) given prior-year one-time Warrior Run revenues and mix shift .
  • Non-GAAP adds elevated: restructuring costs ($46M), impairments ($33M), and disposal-related losses ($42M) were notable adjustments; Adjusted EBITDA fell YoY to $591M (from $640M) and Adjusted EBITDA with Tax Attributes to $777M (from $868M) .

Financial Results

Vs. S&P Global Consensus (Q1 2025):

• Revenue: Actual $2.926B vs Consensus ~$3.048B → miss*
• Adjusted/Primary EPS: Actual $0.27 vs Consensus ~$0.33 → miss*
• Coverage: EPS (9 est.), Revenue (4 est.)*

Segment Revenue Breakdown

KPIs and Operational Metrics

Why results moved:

• Lower YoY due to prior-year Warrior Run PPA monetization, timing of tax attributes recognition, and restructuring costs; partially offset by higher Utilities margins and new renewables in service .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our long-term contracted business model continues to demonstrate its resiliency to tariffs and economic policies, and we are reaffirming our 2025 guidance and long-term growth rate targets.” – Andrés Gluski, CEO .
• “This quarter, we saw meaningful year-over-year growth in our Renewables and Utilities SBUs… With the sale of a minority interest in our captive insurance company, AGIC, we have already achieved our full year 2025 asset sale proceeds target of $400 to $500 million.” – Stephen Coughlin, CFO .
• “We have… all major equipment either on site, or contracted for domestic production, through 2027. We see demand… especially among hyperscalers, where we are the global market leader.” – Andrés Gluski .
• “The cost savings actions… have already been implemented… $150 million cost savings in 2025… full run rate of over $300 million next year.” – Stephen Coughlin .

Q&A Highlights

• AGIC transaction economics: expected EBITDA impact ~$25–$30M; ~$37–$40M annual target payments to partner; structured as low-cost equity-like financing with call option (2030–2035) .
• Tariff exposure: limited to ~ $50M for certain Korean-sourced batteries for 2026 projects, to be shared/mitigated; otherwise de minimis given U.S. manufacturing/onshoring and equipment already imported .
• Tax credit transferability: can pivot to tax equity with similar cash/credit profile; agencies (Moody’s) expected to look through classification differences; no fundamental impact on credit metrics .
• Ohio regulatory update: move to 3-year forward-looking rate mechanism with annual true-up is net positive; OVEC removal estimated $0–$10M impact depending on PJM capacity prices .
• Asset sales progress: cumulative ~$3.4B achieved vs $3.5B target; remaining ~$500M through 2027 expected from mix of thermal sell-downs, partnerships, and potential tech stakes (e.g., Uplight) .

Estimates Context

• Q1 2025 results vs S&P Global consensus: Revenue $2.93B vs ~$3.05B (miss); Adjusted/Primary EPS $0.27 vs ~$0.33 (miss). Estimate coverage: EPS (9), Revenue (4). Management outlook unchanged, implying back-half weighting from new project ramp and cost saves . EPS/Revenue estimates from S&P Global.*
• Potential estimate revisions: near-term (H1) estimates may drift lower reflecting the Q1 miss and timing of tax attribute monetization; however, reaffirmed FY guidance and H2-weighted growth suggest full-year consensus may remain anchored to the company’s range .

Key Takeaways for Investors

• Back-half weighted year: Q1 miss largely reflects unsurprising headwinds (Warrior Run roll-off, tax attribute timing, restructuring); H2 uplift from projects ramping and cost saves remains intact .
• Guidance credibility high: unchanged 2025 guidance underpinned by 11.7 GW backlog (5.3 GW UC), strong hyperscaler demand, and safe-harbored U.S. supply chain .
• Policy/tariff risk limited: de minimis tariff exposure; safe harbor and domestically sourced equipment through 2027 reduce policy volatility; contingency ~$50M is manageable .
• Funding de-risked: $450M AGIC sale completes 2025 asset proceeds; 86% of 2025 notes tendered; no equity issuance needed through 2027 under current plan .
• Utilities a growth anchor: constructive Ohio legislation, prior Indiana rate case approval, and data center load underpin double-digit rate base CAGR and stable returns .
• Strategic flexibility: willingness to operate select coal assets longer supports credit and cash flow while renewables/utility mix increases; still committed to eventual coal exit .
• Actionable: Use weakness from Q1 miss to accumulate if you underwrite H2 ramp and cost saves; focus on commissioning milestones (3.2 GW in 2025), incremental hyperscaler PPAs, and any additional derisking actions that tighten the FY range .

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Footnotes and Disclaimers:

• All company figures and qualitative statements are cited from AES’s Q1 2025 8‑K and press release, Q1 2025 10‑Q, and earnings call transcripts as referenced inline.
• S&P Global consensus values are indicated with an asterisk and provided without document citations: Revenue consensus ~$3,047.5M (4 estimates), Adjusted/Primary EPS consensus ~0.3286 (9 estimates); Actuals as shown above. Values retrieved from S&P Global.*

Sources:

• Q1 2025 8-K/Press Release and exhibits: revenue/EPS, Adjusted metrics, guidance, strategic updates .
• Q1 2025 10-Q: drivers of YoY change, segment context, cash flow, debt, restructuring, and accounting updates .
• Q1 2025 Earnings Call: management commentary and Q&A detail on tariffs, tax credits, AGIC, assets, Ohio regulation .
• Financing press releases: $800M 2032 notes pricing; 3.300% 2025 notes tender offer and results (86.25% tendered at $995.97) .
• Prior quarters for trend: Q4 2024 press release/8‑K and call; Q3 2024 press release .