AES CORP (AES)·Q2 2025 Earnings Summary

Executive Summary

• AES reaffirmed 2025 guidance and posted strong non-GAAP performance: Adjusted EPS $0.51 and Adjusted EBITDA $681M, while GAAP diluted EPS was a loss of $(0.15) on day‑one losses from sales‑type leases and higher tax expense .
• Versus Wall Street consensus, AES delivered a significant EPS beat and an Adjusted EBITDA beat, but missed on revenue: Q2 2025 EPS $0.51 vs $0.40*; EBITDA $681M vs $632M*; revenue $2.86B vs $3.01B* .
• Strategic momentum continues: 12 GW PPA backlog (5.2 GW under construction), 1.9 GW completed YTD, and 1.6 GW of new PPAs signed since May—all with data center customers; AES highlighted robust data center demand and resilient U.S.-centric supply chain and safe harbor protections .
• Utilities catalysts: AES Indiana filed a forward‑looking rate case; Ohio moving to a three‑year forward test‑year structure, reducing regulatory lag. Management reaffirmed Adjusted EPS $2.10–$2.26 for 2025 and maintained the quarterly dividend of $0.17595 .

What Went Well and What Went Wrong

What Went Well

• Renewables SBU Adjusted EBITDA grew 56% YoY on new projects in service; management emphasized data center PPAs and strong execution: “We are a leader in the fastest growing segment in the market” .
• Non‑GAAP profitability strengthened: Adjusted EPS $0.51 rose from $0.38 YoY, aided by a lower adjusted tax rate and contributions from newly placed renewables projects .
• Guidance reaffirmed across Adjusted EBITDA ($2.65–$2.85B), Adjusted EBITDA with Tax Attributes ($3.95–$4.35B), and Adjusted EPS ($2.10–$2.26), underscoring outlook confidence .

What Went Wrong

• GAAP net loss $(150)M and diluted EPS $(0.15) reflected higher day‑one losses on sales‑type leases, higher tax expense, and lower Energy Infrastructure margins vs prior‑year Warrior Run monetization; revenue decreased YoY to $2.855B .
• Energy Infrastructure SBU faced headwinds from the prior‑year PPA monetization timing and portfolio changes (e.g., AES Brasil sale), partially offset by higher fleet availability and Cochrane acquisition .
• Utilities SBU contributed less in the quarter due to planned outages and the sell‑down of AES Ohio, though management expects stronger second‑half performance from rate base investments .

Financial Results

Core P&L and Non‑GAAP (oldest → newest)

Q2 2025 vs Estimates (S&P Global)

Values marked with * were retrieved from S&P Global.

Segment Revenue Breakdown (SBU)

KPIs and Operating Highlights

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “AES is in a uniquely strong position due to our diversified operating portfolio, well‑protected 12 GW backlog of signed long‑term PPAs, and established domestic supply chain.”
• CFO: “Second quarter adjusted EPS increased 34% to $0.51 per share versus $0.38 in the prior year… EPS also increased as a result of $185 million of higher U.S. renewable tax attributes.”
• COO: “We have all the equipment that we need on site… we can provide full confidence in the remaining 1.3 GW being commissioned by the end of the year.”
• CEO on valuation and strategy: “We really are an all‑of‑the‑above company… Our primary aim is financial… create the most shareholder value.”

Q&A Highlights

• Commissioning cadence and tax attributes: Majority of remaining 1.3 GW online in Q3, smaller portion in Q4; tax attributes roughly split between Q3 and Q4 .
• Policy/safe harbor: Projects through 2027 safe‑harbored; minimal FIAC exposure due to construction start and domestic supply chain strategy .
• Utilities regulatory lag: Ohio’s three‑year forward test years expected to largely eliminate lag; new rates anticipated in 2027 under new framework .
• Gas capability for data centers: AES remains technology‑agnostic; can deliver gas solutions where customers require, while near‑term demand skews to solar+storage .
• Maximo AI robotic installation: Internal deployment scaling; potential commercialization beyond 2027; targeted for faster builds and lower working capital .

Estimates Context

• Q2 2025 results vs S&P Global consensus: EPS beat ($0.51 vs $0.40*), revenue miss ($2.86B vs $3.01B*), and Adjusted EBITDA beat ($681M vs $632M*). Management tied the non‑GAAP strength to new renewables in service and lower adjusted tax rate, while GAAP headwinds reflected lease accounting and tax expense .
• Forward quarters: Street models EPS of ~$0.77* in Q3 2025 with revenue ~$3.22B* and EBITDA ~$781M*, normal seasonality and project ramp reflected. AES reaffirmed full‑year Adjusted EPS and Adjusted EBITDA ranges .

Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

• Non‑GAAP performance is strong and improving; AES reiterated full‑year Adjusted EPS and Adjusted EBITDA guidance despite GAAP noise from lease accounting and taxes—focus on Adjusted metrics for valuation framing .
• Data center demand is a durable growth engine; 1.6 GW of new PPAs since May and 12 GW backlog position AES to compound renewables EBITDA through 2027 .
• Regulatory tailwinds at AES Indiana and AES Ohio (forward test years) should accelerate utilities earnings and reduce lag—watch for rate case milestones in 2H25/2026 .
• Portfolio optimization continues (cost actions locked in; moderated coal exit timing); expect 2026 EBITDA growth to accelerate to low‑teens as headwinds subside and savings ramp .
• Near‑term trading implications: Expect estimate revisions lifting EPS/EBITDA, but revenue prints may be choppy due to portfolio mix—stock narrative likely anchored to data center PPAs, commissioning cadence, and regulatory progress .
• Medium‑term thesis: Self‑funded plan, investment‑grade focus, protected backlog/supply chain, and leadership with hyperscalers support multi‑year non‑GAAP growth and improving credit metrics .