Item 1. FINANCIAL STATEMENTS

222K characters. Original on sec.gov · Markdown

Item 1. FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets

(Unaudited)


	March 31, 2026		December 31, 2025

	(in millions, except share and per share amounts)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,600	$	1,382
Restricted cash	599		691
Short-term investments	51		174
Accounts receivable, net of allowance of $41 and $39, respectively	1,651		1,683
Inventory	648		612
Prepaid expenses	133		192
Other current assets, net of allowance of $2 and $2, respectively	1,380		1,723
Current held-for-sale assets	48		45
Total current assets	6,110		6,502
NONCURRENT ASSETS





Property, plant, and equipment, net of accumulated depreciation of $9,895 and $9,796, respectively	39,290		37,818

Investments in and advances to affiliates	1,006		1,004
Debt service reserves and other deposits	120		89
Goodwill	342		342
Other intangible assets, net of accumulated amortization of $503 and $479, respectively	2,019		2,040
Deferred income taxes	425		397

Loan receivable, net of allowance of $18 and $19, respectively	730		755
Other noncurrent assets, net of allowance of $25 and $24, respectively	2,777		2,821

Total noncurrent assets	46,709		45,266
TOTAL ASSETS	$	52,819	$	51,768
LIABILITIES, REDEEMABLE STOCK OF SUBSIDIARIES, AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,962	$	1,980
Accrued interest	318		268
Accrued non-income taxes	333		294
Supplier financing arrangements	805		616
Accrued and other liabilities	1,756		2,223
Recourse debt	919		879
Non-recourse debt	2,281		2,232


Total current liabilities	8,374		8,492
NONCURRENT LIABILITIES
Recourse debt	5,252		5,105
Non-recourse debt	22,547		21,681

Deferred income taxes	1,605		1,581

Other noncurrent liabilities	2,790		2,980

Total noncurrent liabilities	32,194		31,347
Commitments and Contingencies (see Note 9)
Redeemable stock of subsidiaries	2,895		2,824
EQUITY
THE AES CORPORATION STOCKHOLDERS’ EQUITY

Common stock ($0.01 par value, 1,200,000,000 shares authorized; 859,837,679 issued and 713,137,865 outstanding at March 31, 2026 and 859,836,539 issued and 712,201,777 outstanding at December 31, 2025)	9		9
Additional paid-in capital	5,885		5,904
Retained earnings	1,003		641
Accumulated other comprehensive loss	(696)		(698)
Treasury stock, at cost (146,699,814 and 147,634,762 shares at March 31, 2026 and December 31, 2025, respectively)	(1,781)		(1,793)
Total AES Corporation stockholders’ equity	4,420		4,063
NONCONTROLLING INTERESTS	4,936		5,042
Total equity	9,356		9,105
TOTAL LIABILITIES, REDEEMABLE STOCK OF SUBSIDIARIES, AND EQUITY	$	52,819	$	51,768

See Notes to Condensed Consolidated Financial Statements.

4 | The AES Corporation

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended March 31,
	2026		2025

	(in millions, except share and per share amounts)
Revenue:
Non-Regulated	$	2,066	$	1,941
Regulated	1,114		985
Total revenue	3,180		2,926
Cost of Sales:
Non-Regulated	(1,659)		(1,661)
Regulated	(881)		(824)
Total cost of sales	(2,540)		(2,485)
Operating margin	640		441
General and administrative expenses	(55)		(77)
Interest expense	(353)		(342)
Interest income	65		69
Loss on extinguishment of debt	(8)		(8)
Other expense	(58)		(52)
Other income	12		7
Loss on disposal and sale of business interests	—		(1)

Asset impairment expense	(12)		(49)
Foreign currency transaction gains (losses)	11		(10)

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES	242		(22)
Income tax benefit (expense)	41		(17)
Net equity in losses of affiliates	(8)		(34)



NET INCOME (LOSS)	275		(73)



Less: Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries	212		119
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION	$	487	$	46






BASIC EARNINGS PER SHARE:


NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	0.68	$	0.07
DILUTED EARNINGS PER SHARE:


NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	0.68	$	0.07
DILUTED SHARES OUTSTANDING	715		713

See Notes to Condensed Consolidated Financial Statements.

5 | The AES Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended March 31,
	2026		2025

	(in millions)
NET INCOME (LOSS)	$	275	$	(73)
Foreign currency translation activity:
Foreign currency translation adjustments, net of $0 income tax for all periods	2		30

Total foreign currency translation adjustments	2		30
Derivative activity:
Change in fair value of derivatives, net of income tax benefit (expense) of $(2) and $25, respectively	9		(107)
Reclassification to earnings, net of income tax benefit of $1 and $6, respectively	2		(14)
Total change in fair value of derivatives	11		(121)
Pension activity:

Change in pension adjustments due to net actuarial gain for the period, net of $0 income tax for all periods	—		1

Total pension adjustments	—		1




OTHER COMPREHENSIVE INCOME (LOSS)	13		(90)
COMPREHENSIVE INCOME (LOSS)	288		(163)
Less: Comprehensive loss attributable to noncontrolling interests and redeemable stock of subsidiaries	200		127
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION	$	488	$	(36)

See Notes to Condensed Consolidated Financial Statements.

6 | The AES Corporation

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


		Three Months Ended March 31, 2026
	Common Stock		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests (1)
		Shares	Amount		Shares	Amount
		(in millions)
Balance at January 1, 2026		859.8	$	9	147.6	$	(1,793)	$	5,904	$	641	$	(698)	$	5,042
Net income (loss)		—	—		—	—		—		487		—		(211)
Foreign currency translation adjustments and reclassification to earnings, net of income tax		—	—		—	—		—		—		2		—
Change in fair value of derivatives and reclassification to earnings, net of income tax		—	—		—	—		—		—		(1)		12


Total other comprehensive income (loss)		—	—		—	—		—		—		1		12




Distributions to noncontrolling interests		—	—		—	—		—		—		—		(225)
Acquisitions of noncontrolling interests		—	—		—	—		(1)		—		1		(29)
Contributions from noncontrolling interests		—	—		—	—		—		—		—		226
Sales to noncontrolling interests		—	—		—	—		(1)		—		—		120
Issuance of preferred shares in subsidiaries		—	—		—	—		—		—		—		1


Dividends declared on common stock ($0.17595/share)		—	—		—	—		—		(125)		—		—

Issuance and exercise of stock-based compensation benefit plans, net of income tax		—	—		(0.9)	12		(17)		—		—		—
Balance at March 31, 2026		859.8	$	9	146.7	$	(1,781)	$	5,885	$	1,003	$	(696)	$	4,936


		Three Months Ended March 31, 2025
	Common Stock		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests (1)
		Shares	Amount		Shares	Amount
		(in millions)
Balance at January 1, 2025		859.7	$	9	148.6	$	(1,805)	$	5,913	$	293	$	(766)	$	4,060
Net income (loss)		—	—		—	—		—		46		—		(149)
Foreign currency translation adjustments and reclassification to earnings, net of income tax		—	—		—	—		—		—		30		—
Change in fair value of derivatives and reclassification to earnings, net of income tax		—	—		—	—		—		—		(113)		(8)
Change in pension adjustments and reclassification to earnings, net of income tax		—	—		—	—		—		—		1		—

Total other comprehensive income (loss)		—	—		—	—		—		—		(82)		(8)


Reclassification of redeemable stock of subsidiaries to noncontrolling interests (2)		—	—		—	—		—		—		—		38

Distributions to noncontrolling interests		—	—		—	—		—		—		—		(57)

Contributions from noncontrolling interests		—	—		—	—		—		—		—		114
Sales to noncontrolling interests		—	—		—	—		(15)		—		—		250
Issuance of preferred shares in subsidiaries		—	—		—	—		—		—		—		9
Dividends declared on common stock ($0.17595/share)		—	—		—	—		—		(125)		—		—

Issuance and exercise of stock-based compensation benefit plans, net of income tax		—	—		(0.8)	10		(10)		—		—		—
Balance at March 31, 2025		859.7	$	9	147.8	$	(1,795)	$	5,888	$	214	$	(848)	$	4,257

(1) Excludes redeemable stock of subsidiaries. See Note 11—Redeemable Stock of Subsidiaries.

(2) Related to the reclassification of the AES Indiana Pike County BESS tax equity partnership from Redeemable stock of subsidiaries to Noncontrolling interests. See Note 11—Redeemable Stock of Subsidiaries.

See Notes to Condensed Consolidated Financial Statements.

7 | The AES Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
	2026		2025

	(in millions)
OPERATING ACTIVITIES:
Net income (loss)	$	275	$	(73)
Adjustments to net income (loss):
Depreciation, amortization, and accretion of AROs	433		337
Emissions allowance expense	71		102
Gain on realized/unrealized derivatives	(6)		(15)


Impairment expense	12		49
Loss (gain) on realized/unrealized foreign currency	(20)		8





Deferred income tax expense (benefit), net of tax credit transfers allocated to AES	(9)		10
Tax credit transfers allocated to noncontrolling interests	190		—
Other	93		122
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	38		(99)
(Increase) decrease in inventory	(38)		(28)
(Increase) decrease in prepaid expenses and other current assets	403		169
(Increase) decrease in other assets	19		18
Increase (decrease) in accounts payable and other current liabilities	(161)		3
Increase (decrease) in income tax payables, net, and other tax payables	(112)		(83)

Increase (decrease) in other liabilities	13		25
Net cash provided by operating activities	1,201		545
INVESTING ACTIVITIES:
Capital expenditures	(1,766)		(1,254)
Acquisitions of business interests, net of cash and restricted cash acquired	—		(4)
Proceeds from the sale of business interests, net of cash and restricted cash sold	—		5

Sale of short-term investments	126		33
Purchase of short-term investments	—		(18)




Purchase of emissions allowances	(159)		(39)

Other investing	—		(5)
Net cash used in investing activities	(1,799)		(1,282)
FINANCING ACTIVITIES:
Borrowings under the revolving credit facilities	1,403		1,187
Repayments under the revolving credit facilities	(533)		(451)
Commercial paper borrowings (repayments), net	41		255
Issuance of recourse debt	800		800
Repayments of recourse debt	(800)		(774)
Issuance of non-recourse debt	459		1,293
Repayments of non-recourse debt	(373)		(759)
Payments for financing fees	(5)		(21)
Purchases under supplier financing arrangements	468		317
Repayments of obligations under supplier financing arrangements	(267)		(628)
Distributions to noncontrolling interests	(488)		(84)

Contributions from noncontrolling interests	37		73
Sales to noncontrolling interests	117		245
Issuance of preferred shares in subsidiaries	113		8

Dividends paid on AES common stock	(125)		(125)
Payments for financed capital expenditures	(44)		(7)


Other financing	(47)		(12)
Net cash provided by financing activities	756		1,317
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1)		(1)
Increase in cash, cash equivalents, and restricted cash of held-for-sale businesses	—		(52)
Total increase in cash, cash equivalents, and restricted cash	157		527
Cash, cash equivalents and restricted cash, beginning	2,162		2,039
Cash, cash equivalents and restricted cash, ending	$	2,319	$	2,566
SUPPLEMENTAL DISCLOSURES:
Cash payments for interest, net of amounts capitalized	$	266	$	267
Cash payments for income taxes, net of refunds	47		60
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:








Accruals for capital expenditures	520		377
Noncash contributions from noncontrolling interests related to tax credit transfers	190		—
Noncash distributions to noncontrolling interests	190		—
Dividends declared but not yet paid	125		125
Noncash recognition of new operating and financing leases (see Note 10)	72		60
Noncash contributions from noncontrolling interests	—		42

See Notes to Condensed Consolidated Financial Statements.

8 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

Notes to Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2026 and 2025

(Unaudited)

FINANCIAL STATEMENT PRESENTATION

Consolidation — In this Quarterly Report, the terms “AES,” “the Company,” “us,” or “we” refer to the consolidated entity, including its subsidiaries and affiliates. The terms “The AES Corporation” or “the Parent Company” refer only to the publicly held holding company, The AES Corporation, excluding its subsidiaries and affiliates.

The condensed consolidated financial statements of the Company include the accounts of The AES Corporation and its controlled subsidiaries. Furthermore, VIEs in which the Company has an ownership interest and is the primary beneficiary, thus controlling the VIE, have been consolidated. Intercompany transactions and balances are eliminated in consolidation. Investments in entities where the Company has the ability to exercise significant influence, but not control, are accounted for using the equity method of accounting.

Consolidated VIEs — At March 31, 2026, the Company consolidates a number of entities that have been identified as VIEs under ASC 810, Consolidation. These entities are primarily limited liability entities or partnership arrangements with third-party investors structured to develop, construct, and operate power generation facilities and related assets. These entities were generally determined to have insufficient equity to finance their activities during development and construction without additional subordinated financial support. The Company also has tax equity arrangements entered into with third parties in order to monetize certain tax credits associated with renewables facilities. These tax equity partnerships meet the definition of a VIE as the holders of the membership interests, as a group, lack the characteristics of a controlling financial interest, including substantive kickout rights. Under these arrangements, the third-party investors are allocated earnings, tax attributes, and distributable cash in accordance with the respective limited liability company agreements. The assets of these tax equity partnerships are generally restricted from transfer under the terms of their limited liability company agreements. The third-party investor’s ownership interest is recorded as either Redeemable stock of subsidiaries or Noncontrolling interests in the Condensed Consolidated Balance Sheets based on applicable guidance. See Note 11—Redeemable Stock of Subsidiaries and Note 12—Equity for further information.

Determining whether the Company is the primary beneficiary of a VIE requires judgment, including an assessment of contractual rights, operational responsibilities, and exposure to variability in returns. AES is considered the primary beneficiary of these VIEs when it has the power to direct the activities that most significantly affect their economic performance, such as construction, budgeting, operations, and maintenance, and it has the obligation to absorb expected losses and the right to receive benefits through its variable interests. As of March 31, 2026, certain consolidated VIEs have arrangements which may require the Company to contribute additional equity totaling $1.5 billion. Such contributions are generally contingent upon the underlying asset achieving specific project milestones. Certain consolidated VIEs are financed with non-recourse project‑level debt. Creditors of these VIEs have no recourse to the Company beyond the VIE’s assets. See Note 8—Obligations for further information.

Unconsolidated VIEs — The Company has noncontrolling interests in VIEs accounted for under the equity method. These entities include partnerships in which the limited partners do not have substantive rights over the significant activities of these entities, as well as renewable energy project joint ventures that have insufficient equity to finance their activities during development and construction without additional subordinated financial support. AES is not the primary beneficiary because it does not have a controlling financial interest in these entities and does not have the power to direct the activities that most significantly impact these VIEs' performance, and therefore does not consolidate any of these entities. AES’ investment in these entities totaled approximately $127 million as of both March 31, 2026 and December 31, 2025, which are included in Investments in and advances to affiliates on the Condensed Consolidated Balance Sheets. See Note 7—Investments In and Advances to Affiliates for further information. AES' maximum exposure to loss is limited to its current investments in these entities.

Interim Financial Presentation — The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with GAAP, as contained in the FASB ASC, for interim financial information and Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual fiscal reporting periods. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, comprehensive income, changes in equity, and cash flows. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of expected results for the year ending December 31, 2026. The accompanying condensed consolidated financial statements are unaudited and

9 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

should be read in conjunction with the 2025 audited consolidated financial statements and notes thereto, which are included in the 2025 Form 10-K filed with the SEC on March 2, 2026 (the “2025 Form 10-K”).

Proposed Merger — On March 1, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Horizon Parent, L.P., a Delaware limited partnership (“Parent”), and Horizon Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”). 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. Parent is controlled by investment vehicles affiliated with one or more funds, accounts or other entities managed or advised by Global Infrastructure Management, LLC and the EQT Infrastructure VI fund.

At the effective time of the Merger, each share of the Company’s common stock outstanding immediately before the effective time (other than (i) shares of Company common stock held by any holder who properly exercises and perfects appraisal rights under Delaware law in respect of such shares and (ii) any shares of Company common stock held in the treasury of the Company or owned, directly or indirectly, by Parent or Merger Sub) will be converted automatically into the right to receive $15.00 in cash, without interest, per share.

The Board of Directors of the Company has unanimously approved the Merger Agreement, including the Merger and the other transactions contemplated thereby, and the Board of Directors of the Company has resolved to recommend that the Company stockholders approve the Merger and adopt the Merger Agreement.

The Merger Agreement includes certain representations, warranties, and covenants. Among other things, the Company has agreed (subject to certain exceptions) to conduct its business in the ordinary course consistent with past practice and not to take specified actions prior to closing without Parent’s consent. The Company is also required to hold a special meeting of its stockholders to seek approval of the Merger and, subject to certain exceptions, it has agreed not to solicit or engage in discussions or negotiations regarding alternative business combination proposals and not to withdraw or modify the Board’s recommendation in favor of the Merger.

In addition, subject to the terms of the Merger Agreement, the Company, Parent, and Merger Sub are required to use reasonable best efforts to obtain all required regulatory approvals, including certain regulatory approvals from the PUCO, the New York Public Service Commission, the FERC, and the Committee on Foreign Investment in the United States, and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, as well as the receipt of certain approvals under the applicable laws of certain foreign countries, so long as such approval does not result in a Burdensome Condition (as defined in the Merger Agreement).

Consummation of the Merger is subject to various closing conditions, including: (1) approval of the stockholders of the Company, (2) receipt of the specified regulatory approvals without the imposition of a Burdensome Condition, (3) absence of any law or order prohibiting the consummation of the Merger, (4) subject to materiality qualifiers, the accuracy of each party’s representations and warranties, (5) each party’s compliance in all material respects with its obligations and covenants under the Merger Agreement, and (6) the absence of a material adverse effect with respect to the Company and its subsidiaries. The completion of the Merger is not conditioned on receipt of financing by Parent.

The Merger Agreement contains certain termination rights for both the Company and Parent, including if the Merger is not consummated by June 1, 2027 (subject to extension for an additional two successive three-month periods if all of the conditions to closing, other than the conditions related to obtaining regulatory approvals, have been satisfied). The Merger Agreement also provides for certain termination rights for each of the Company and Parent, and provides that, upon termination of the Merger Agreement under certain specified circumstances, Parent would be required to pay a termination fee of $100 million or approximately $588 million (depending on the specific circumstances of termination) to the Company, and under other specified circumstances, the Company would be required to pay Parent a termination fee of approximately $321 million.

10 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

Cash, Cash Equivalents, and Restricted Cash — The following table provides a summary of cash, cash equivalents, and restricted cash amounts reported on the Condensed Consolidated Balance Sheets that reconcile to the total of such amounts as shown on the Condensed Consolidated Statements of Cash Flows (in millions):


	March 31, 2026		December 31, 2025
Cash and cash equivalents	$	1,600	$	1,382
Restricted cash (1)	599		691
Debt service reserves and other deposits (2)	120		89
Cash, Cash Equivalents, and Restricted Cash	$	2,319	$	2,162

(1)Includes approximately $422 million and $451 million of cash maintained in accordance with certain covenants of non-recourse debt agreements and $152 million and $153 million of cash held as collateral to cover potential liabilities for current and future insurance claims being assumed by AGIC, AES' captive insurance company, as of March 31, 2026 and December 31, 2025, respectively. See Note 8 —Obligations for further information.

(2)Includes approximately $111 million and $80 million of cash maintained in accordance with certain covenants of non-recourse debt agreements as of March 31, 2026 and December 31, 2025, respectively. See Note 8 —Obligations for further information.

Tax Credit Transferability — Historically, the Company has financed renewables projects with investments from tax equity investors who are allocated certain tax benefits associated with renewable energy projects (e.g., investment tax credits) through partnership agreements. The U.S Inflation Reduction Act of 2022 (the “IRA”) allows the owners of renewable energy projects to directly transfer ITCs to unrelated tax credit buyers. This provides the Company with the flexibility to obtain financing on any particular project with (i) the transfer of tax credits or (ii) investments from tax equity investors who are allocated tax benefits. The Company may also elect to retain the tax credit and use it to reduce its tax liability.

The Company accounts for tax credits that it will retain or transfer under ASC 740*—Income Taxes*, as a reduction in income tax expense by either including the expected amount of the tax credit to be claimed or the cash to be received when transferred, respectively, in the calculation of its annual effective tax rate throughout the year the renewables project is placed in service. The Company applies the flow-through method to account for its investment tax credits. The estimated tax credits are updated on a quarterly basis, with the year-end calculation including only the tax credits that are associated with projects placed in service, comprising credits claimed or transferred during the year. In assessing realizability for credits to be transferred, the Company includes cash it anticipates receiving in establishing any valuation allowance and establishes a valuation allowance equal to its best estimate of any discount on the transfer. In many cases, ITCs are generated at partnerships which are non-tax paying entities for U.S. federal income tax purposes. These entities cannot utilize tax credits, but rather allocate credits to their partners, who report their share of the partnership credits on their individual tax returns. Once a project is placed in service, any portion of the tax credit to be transferred which is allocated to a noncontrolling interest holder is recorded as a noncash deemed contribution within Noncontrolling interests or Redeemable stock of subsidiaries, as applicable, on the Condensed Consolidated Balance Sheets as this represents an increase in the partners’ capital account. To the extent any of the expected transfer proceeds are contractually obligated to be distributed to the noncontrolling interest holder, the Company records a corresponding noncash deemed distribution within Noncontrolling interests or Redeemable stock of subsidiaries, as applicable. The receipt of cash from the transfer of tax credits, inclusive of the portion allocated to noncontrolling interest holders, is treated as an operating cash inflow on the Condensed Consolidated Statements of Cash Flows. Proceeds from the transfer of tax credits are excluded from the supplemental disclosure of Cash payments for income taxes, net of refunds.

During the three months ended March 31, 2026, the Company executed an agreement for $190 million to transfer ITCs directly to a third party at a discount. The $190 million was allocated to noncontrolling interests and treated as a contribution from noncontrolling interest holders. The Company recorded a receivable of $190 million in Other current assets and a corresponding payable in Accrued and other liabilities on the Condensed Consolidated Balance Sheets as of March 31, 2026, since the Company is contractually obligated to distribute the amount to the noncontrolling interest holders. The Company received and distributed the cash proceeds from this transfer to noncontrolling interest holders in April 2026. In addition, during the three months ended March 31, 2026, we received and distributed cash proceeds of $414 million to noncontrolling interest holders related to a tax credit transfer agreement executed in 2025.

During the three months ended March 31, 2025, the Company did not execute any transfers of ITCs directly to third parties, however we received cash proceeds of $75 million related to a tax credit transfer agreement executed in 2024.

New Accounting Pronouncements Adopted in 2026 — The Company assessed all accounting pronouncements adopted in 2026 and determined they were either not applicable or did not have a material impact on the Company’s condensed consolidated financial statements.

11 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

New Accounting Pronouncements Issued But Not Yet Effective — The following table provides a brief description of recent accounting pronouncements that could have a material impact on the Company’s condensed consolidated financial statements once adopted. Accounting pronouncements not listed below were assessed and determined to be either not applicable or are expected to have no material impact on the Company’s condensed consolidated financial statements.



New Accounting Standards Issued But Not Yet Effective
ASU Number and Name	Description	Date of Adoption	Effect on the financial statements upon adoption
2024-03: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)	The amendments in this Update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1. Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e). 2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4. Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.	The date for each amendment in this Update is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements. This ASU only affects disclosures, which will be provided when the amendment becomes effective.
2025-06: Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software	The amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended. In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software. The two factors to consider in determining whether there is significant development uncertainty are whether: 1. The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing. 2. The entity has determined what it needs the software to do (for example, functions or features), including whether the entity has identified or continues to substantially revise the software’s significant performance requirements.	The amendments in this Update are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.

12 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025



2025-07: Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract	Issue 1: Derivatives Scope Refinements The amendments in this Update exclude from derivative accounting non-exchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract. Issue 2: Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract The amendments in this Update clarify that an entity should apply the guidance in Topic 606, including the guidance on noncash consideration to a contract with share-based noncash consideration (for example, shares, share options, or other equity instruments) from a customer for the transfer of goods or services.	The amendments in this Update are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2025-09: Hedge Accounting Improvements	Issue 1: Similar Risk Assessment for Cash Flow Hedges The amendments in this Update permit grouping forecasted transactions in a cash flow hedge based on similar risk exposures, subject to initial and ongoing risk assessments. Issue 2: Hedging Forecasted Interest Payments on Choose‑Your‑Rate Debt The amendments in this Update provide a model to facilitate the application of cash flow hedge accounting for forecasted interest payments on variable‑rate debt that permits borrowers to change the interest rate index and reset frequency (“choose‑your‑rate” debt). Issue 3: Cash Flow Hedges of Nonfinancial Forecasted Transactions The amendments in this Update expand hedge accounting for forecasted purchases and sales of nonfinancial assets by allowing hedging of eligible price components and subcomponents, subject to specific criteria. Issue 4: Net Written Options as Hedging Instruments The amendments in this Update eliminate the requirement to apply the net written option test to compound derivatives consisting of a swap and a written option that are designated as hedging instruments in cash flow or fair value hedges of interest rate risk. Issue 5: Foreign‑Currency‑Denominated Debt Used in Dual Hedges The amendments in this Update eliminate recognition and presentation mismatches in dual hedge strategies by excluding fair value hedge basis adjustments from net investment hedge effectiveness assessments and requiring related foreign exchange gains and losses to be recognized in earnings.	The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, and should be applied prospectively for all hedging relationships that exist at the date of adoption.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2025-11: Interim Reporting (Topic 270)—Narrow-Scope Improvements	The amendments in this Update clarify interim disclosure requirements and the applicability of Topic 270 by organizing existing GAAP interim disclosure requirements into a single framework and clarifying when additional disclosures are required for material events occurring after the most recent annual reporting period.	The amendments in this Update are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2025-12: Codification Improvements	The amendments in this Update include 33 issues that represent changes to the Codification that clarify, correct errors, or make minor improvements, making the Codification easier to understand and apply. The amendments in this Update are varied in nature and may affect the application of guidance in cases in which the original guidance may have been unclear.	The amendments in this Update are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted on an issue-by-issue basis as of the beginning of an annual reporting period.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.

13 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

INVENTORY

The following table summarizes the Company’s inventory balances as of the dates indicated (in millions):


	March 31, 2026		December 31, 2025
Spare parts and supplies	$	392	$	392
Fuel and other raw materials	256		220

Total	$	648	$	612

FAIR VALUE

The fair value of current financial assets and liabilities, debt service reserves, and other deposits approximate their reported carrying amounts. The estimated fair values of the Company’s assets and liabilities have been determined using available market information. Because these amounts are estimates and based on hypothetical transactions to sell assets or transfer liabilities, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. For further information on our valuation techniques and policies, see Note 5—Fair Value in Item 8.—Financial Statements and Supplementary Data of our 2025 Form 10-K.

Recurring Measurements

The following table presents, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of the dates indicated (in millions). For the Company’s investments in marketable debt securities, the security classes presented were determined based on the nature and risk of the security and are consistent with how the Company manages, monitors, and measures its marketable securities:


	March 31, 2026								December 31, 2025
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
DEBT SECURITIES:
Available-for-sale:

Certificates of deposit	$	—	$	3	$	—	$	3	$	—	$	3	$	—	$	3
Government debt securities	—		3		—		3		—		—		—		—
Total debt securities	—		6		—		6		—		3		—		3
EQUITY SECURITIES:
Mutual funds	57		—		—		57		57		—		—		57
Common stock	—		—		—		—		1		—		—		1

Total equity securities	57		—		—		57		58		—		—		58
DERIVATIVES:
Interest rate derivatives	—		238		—		238		—		279		—		279

Foreign currency derivatives	—		12		—		12		—		24		—		24
Commodity derivatives	108		69		6		183		109		72		5		186
Total derivatives — assets	108		319		6		433		109		375		5		489
TOTAL ASSETS	$	165	$	325	$	6	$	496	$	167	$	378	$	5	$	550
Liabilities
Contingent consideration (1)	$	—	$	—	$	209	$	209	$	—	$	—	$	205	$	205
DERIVATIVES:
Interest rate derivatives	—		46		—		46		—		59		—		59

Foreign currency derivatives	—		24		—		24		—		28		—		28
Commodity derivatives	100		24		33		157		110		42		45		197
Total derivatives — liabilities	100		94		33		227		110		129		45		284
TOTAL LIABILITIES	$	100	$	94	$	242	$	436	$	110	$	129	$	250	$	489

(1)The Level 3 contingent consideration is mainly related to the acquisition of Bellefield in June 2023.

As of March 31, 2026, all available-for-sale debt securities had stated maturities within one year. For the three months ended March 31, 2026, no impairments of marketable securities were recognized in earnings or other comprehensive income (loss). Credit-related impairments are recognized as an allowance with a corresponding impact recognized as a credit loss in Other expense. Gains and losses on sale of investments are determined using the specific-identification method. The following table presents gross proceeds from the sale of available-for-sale securities for the periods indicated (in millions):


	Three Months Ended March 31,
		2026		2025
Gross proceeds from sale of available-for-sale securities		$	1	$	3

The Company accounts for equity securities without readily determinable fair values using the measurement

14 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

alternative in accordance with ASC 321*.* These securities are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer. Upward adjustments resulting from observable price changes are recorded in Other income and impairments and downward adjustments are recorded in Other expense. As of both December 31, 2025 and March 31, 2026, the carrying amount of equity securities accounted for using the measurement alternative was $19 million, inclusive of $22 million of cumulative upward adjustments recorded in Other income in prior years and a $48 million downward adjustment recorded in Other expense in June 2025 to reflect observable price changes for our investment in 5B Holdings Ptd. Ltd. ("5B").

The following tables present a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2026 and 2025 (derivative balances are presented net), in millions. Transfers between Level 3 and Level 2 principally result from changes in the significance of unobservable inputs used to calculate the credit valuation adjustment.


	Derivative Assets and Liabilities
Three Months Ended March 31, 2026	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at January 1, 2026	$	—	$	—	$	(40)	$	(205)	$	(245)
Total realized and unrealized gains (losses):
Included in earnings	—		—		1		(6)		(5)
Included in other comprehensive income (loss) — derivative activity	—		—		14		—		14



Settlements	—		—		(2)		2		—


Balance at March 31, 2026	$	—	$	—	$	(27)	$	(209)	$	(236)
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period	$	—	$	—	$	1	$	(6)	$	(5)

	Derivative Assets and Liabilities
Three Months Ended March 31, 2025	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at January 1, 2025	$	(1)	$	52	$	(21)	$	(145)	$	(115)
Total realized and unrealized gains (losses):
Included in earnings	—		1		—		(38)		(37)
Included in other comprehensive income (loss) — derivative activity	(1)		—		26		—		25



Settlements	—		(10)		(1)		10		(1)
Transfers of assets (liabilities), net into Level 3	—		—		(2)		—		(2)

Balance at March 31, 2025	$	(2)	$	43	$	2	$	(173)	$	(130)
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period	$	—	$	(6)	$	—	$	(38)	$	(44)

The following table summarizes the significant unobservable inputs used for Level 3 derivative assets (liabilities) as of March 31, 2026 (in millions, except range amounts):


Type of Derivative	Fair Value		Unobservable Input	Amount or Range (Average)





Commodity:
CAISO energy swap	$	(24)	Forward CAISO energy prices per MWH from 2032 through 2038	$5.85 to $132.82 ($50.22)
MISO energy swap	(3)		Forward MISO energy prices per MWH from 2032 through 2040	$22.76 to $91.39 ($47.98)

Total	$	(27)

For the CAISO and MISO energy swaps, increases (decreases) in the estimates above would decrease (increase) the value of the derivatives.

Contingent consideration is primarily related to future milestone payments associated with acquisitions of renewables development projects. The estimated fair value of contingent consideration is determined using probability-weighted discounted cash flows based on internal forecasts, which are considered Level 3 inputs. Changes in Level 3 inputs, particularly changes in the probability of achieving development milestones, could result in material changes to the fair value of the contingent consideration and could materially impact the amount of expense or income recorded each reporting period. Contingent consideration is updated quarterly with any prospective changes in fair value recorded through earnings. Gains and losses on the remeasurement of contingent consideration are recognized in Other income and Other expense, respectively, on the Condensed Consolidated Statements of Operations.

15 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

Nonrecurring Measurements

The Company measures fair value using the applicable fair value measurement guidance. Impairment expense, shown as pre-tax loss below, is measured by comparing the fair value at the evaluation date to the then-latest available carrying amount and is included in Asset impairment expense on the Condensed Consolidated Statements of Operations. The following table summarizes our major categories of asset groups measured at fair value on a nonrecurring basis and their level within the fair value hierarchy (in millions):
















	Measurement Date		Carrying Amount (1)		Fair Value
Three Months Ended March 31, 2025		Level 1		Level 2		Level 3		Pre-tax Loss




Held-for-sale businesses: (2)


Mong Duong (3)	3/31/2025		383		—		371		—	17

(1)Represents the carrying values of the asset groups at the dates of measurement, before fair value adjustment.

(2)See Note 18—Held-for-Sale and Dispositions for further information.

(3)The pre-tax loss recognized was calculated using the fair value of the Mong Duong disposal group less costs to sell of $5 million.

AES Clean Energy Development Projects — On a quarterly basis, the Company reviews the status of development projects to identify projects that are no longer viable and will be abandoned. The fair value of each abandoned project with no salvage value is determined to be zero as there are no future projected cash flows, resulting in a full write-off of the carrying value of project development intangibles and capitalized development costs incurred.

The Company recognized $6 million and $31 million of pre-tax asset impairment expense related to AES Clean Energy Development Projects during the three months ended March 31, 2026 and 2025, respectively. See Note 16—Asset Impairment Expense for further information.

Financial Instruments Not Measured at Fair Value in the Condensed Consolidated Balance Sheets

The following table presents (in millions) the carrying amount, fair value, and fair value hierarchy of the Company’s financial assets and liabilities that are not measured at fair value in the Condensed Consolidated Balance Sheets as of the periods indicated, but for which fair value is disclosed:


		March 31, 2026
		Carrying Amount		Fair Value
		Total		Level 1		Level 2		Level 3
Assets:	Financing receivables (1)	$	828	$	930	$	—	$	—	$	930
Liabilities:	Non-recourse debt	24,080		25,245		—		22,601		2,644
	Recourse debt	6,171		5,101		—		5,101		—


		December 31, 2025
		Carrying Amount		Fair Value
		Total		Level 1		Level 2		Level 3
Assets:	Financing receivables (1)	$	855	$	955	$	—	$	—	$	955
Liabilities:	Non-recourse debt	23,178		23,749		—		20,448		3,301
	Recourse debt	5,984		5,003		—		5,003		—

(1)For both periods presented, amounts primarily relate to the Mong Duong loan receivable, payment deferrals granted to mining customers as part of our green blend agreements in Chile, the sale of the Redondo Beach land, and the fair value of the Argentine FONINVEMEM receivables. These are included in Loan receivable and Other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets. See Note 5—Financing Receivables for further information.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

For further information on the Company’s derivative and hedge accounting policies, see Note 1—General and Summary of Significant Accounting Policies—Derivatives and Hedging Activities of Item 8.—Financial Statements and Supplementary Data in the 2025 Form 10-K.

16 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

Volume of Activity — The following tables present the Company’s maximum notional (in millions) over the remaining contractual period by type of derivative as of March 31, 2026, and the dates through which the maturities for each type of derivative range:


Interest Rate and Foreign Currency Derivatives	Maximum Notional Translated to USD		Latest Maturity (1)
Interest rate	$	11,010	2058

Foreign currency:

Chilean peso	162		2028

Colombian peso	157		2028
Euro	116		2028


Commodity Derivatives	Maximum Notional	Latest Maturity
Natural Gas (in MMBtu)	83	2029
Power (in MWhs) (2)	32	2040

(1)Maturity dates are consistent for both designated and non-designated positions.

(2)Includes one contract designated as a cash flow hedge with a final maturity date in 2038.

Accounting and Reporting — Assets and Liabilities — The following tables present the fair value of the Company’s derivative assets and liabilities as of the dates indicated (in millions):


Fair Value	March 31, 2026						December 31, 2025
Assets	Designated		Not Designated		Total		Designated		Not Designated		Total
Interest rate derivatives	$	238	$	—	$	238	$	279	$	—	$	279

Foreign currency derivatives	6		6		12		11		13		24
Commodity derivatives	8		175		183		4		182		186
Total assets	$	252	$	181	$	433	$	294	$	195	$	489
Liabilities
Interest rate derivatives	$	46	$	—	$	46	$	59	$	—	$	59

Foreign currency derivatives	1		23		24		4		24		28
Commodity derivatives	30		127		157		46		151		197
Total liabilities	$	77	$	150	$	227	$	109	$	175	$	284


	March 31, 2026				December 31, 2025
Fair Value	Assets		Liabilities		Assets		Liabilities
Current	$	249	$	132	$	261	$	154
Noncurrent	184		95		228		130
Total	$	433	$	227	$	489	$	284

Earnings and Other Comprehensive Income (Loss) — The following table presents the pre-tax gains (losses) recognized in AOCL and earnings on the Company’s derivative instruments for the periods indicated (in millions):


	Three Months Ended March 31,
		2026			2025
Cash flow hedges
Gains (losses) recognized in AOCL
Interest rate derivatives			$	(8)		$	(166)

Foreign currency derivatives			(1)			4
Commodity derivatives			20			30
Total			$	11		$	(132)
Gains (losses) reclassified from AOCL into earnings
Interest rate derivatives — Interest expense			$	(3)		$	15

Foreign currency derivatives — Foreign currency transaction gains (losses)			2			3
Commodity derivatives — Cost of sales—Non-Regulated			—			2
Total			$	(1)		$	20








Gains reclassified from AOCL to earnings due to change in forecast			$	—		$	8
Gains (losses) recognized in earnings related to

Not designated as hedging instruments:

Foreign currency derivatives — Foreign currency transaction gains (losses)			1			(2)
Commodity derivatives — Revenue—Non-Regulated			33			23
Commodity derivatives — Cost of sales—Non-Regulated			8			(5)
Total			$	42		$	16

17 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

Reclassifications from AOCL to earnings are forecasted to decrease pre-tax income from continuing operations by $7 million for the twelve months ended March 31, 2027, primarily related to foreign currency derivatives.

FINANCING RECEIVABLES

Receivables with contractual maturities of greater than one year are considered financing receivables. The following table presents long-term financing receivables, excluding lease receivables and amounts classified as held for sale, by country as of the dates indicated (in millions):


	March 31, 2026						December 31, 2025
	Gross Receivable		Allowance		Net Receivable		Gross Receivable		Allowance		Net Receivable
Vietnam	$	748	$	18	$	730	$	774	$	19	$	755
Chile	59		—		59		61		—		61
U.S.	53		21		32		51		19		32


Other	7		—		7		7		—		7
Total	$	867	$	39	$	828	$	893	$	38	$	855

Vietnam — AES has recorded loan receivables of $831 million as of March 31, 2026 pertaining to our Mong Duong plant in Vietnam. During the three months ended March 31, 2026 and March 31, 2025, the Company collected $32 million and $29 million, respectively. The plant was constructed under a BOT contract and sold to the Vietnamese government, while we remain the operator for the duration of the 25-year PPA. Mong Duong was reclassified from held-for-sale to held and used as of May 31, 2025 and therefore $101 million was classified in Other current assets, and $730 million in Loan receivable on the Condensed Consolidated Balance Sheet as of March 31, 2026. See Note 14—Revenue and Note 18—Held-for-Sale and Dispositions for further information.

Chile — AES Andes has recorded non-current receivables pertaining to payment deferrals granted to mining customers as part of our green blend agreements.

U.S. — AES has recorded non-current receivables pertaining to the sale of the Redondo Beach land. The anticipated collection period extends beyond March 31, 2027.

ALLOWANCE FOR CREDIT LOSSES

The following table represents the rollforward of the allowance for credit losses for the periods indicated (in millions):


Three Months Ended March 31, 2026	Accounts Receivable		Financing Receivables		Other (1)		Total
CECL reserve balance at beginning of period	$	39	$	38	$	6	$	83
Current period provision	11		1		—		12
Write-offs charged against allowance	(9)		—		—		(9)


CECL reserve balance at end of period	$	41	$	39	$	6	$	86


Three Months Ended March 31, 2025	Accounts Receivable		Financing Receivables		Other (2)		Total
CECL reserve balance at beginning of period	$	52	$	15	$	29	$	96
Current period provision	13		—		—		13



CECL reserve balance at end of period	$	65	$	15	$	29	$	109

(1)Primarily relates to credit losses allowance on Argentina receivables as of March 31, 2026.

(2)Primarily relates to credit losses allowance classified in Current held-for-sale assets and Noncurrent held-for-sale assets on the Condensed Consolidated Balance Sheets, and credit losses allowance on Argentina receivables as of March 31, 2025.

Following the implementation of customer billing system upgrades at our utilities in 2023 and 2024, a temporary pause in customer disconnections, certain collections efforts, and write-off processes contributed to increased provisions and allowance for credit losses throughout 2025. AES Indiana and AES Ohio reinstituted customer disconnections and write-off processes in March and June 2025, respectively. The resumption of these activities resulted in increased write-offs in the current period.

18 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

INVESTMENTS IN AND ADVANCES TO AFFILIATES

Summarized Financial Information — The following table summarizes financial information of the Company’s 50%-or-less-owned affiliates that are accounted for using the equity method (in millions):


	50%-or-less Owned Affiliates (1)
Three Months Ended March 31,	2026		2025
Revenue	$	734	$	460
Operating loss	(4)		(14)
Net loss	(60)		(108)
Net loss attributable to affiliates	(66)		(118)

(1)The summarized financial information of Uplight is not included in the table above for the three months ended March 31, 2026 as the equity method of accounting was suspended during the fourth quarter of 2025.

Uplight — In March 2026, the Company entered into an agreement to sell its 25% ownership interest and convertible note in Uplight for up to $40 million, including $10 million at closing and up to an additional $30 million contingent upon specified events. The transaction is expected to close in the second half of 2026. Uplight is reported in the New Energy Technologies SBU reportable segment.

Alto Maipo — The Company holds a 99% ownership interest in Alto Maipo SpA (“Alto Maipo”), a hydroelectric plant in Chile. In May 2022, Alto Maipo emerged from bankruptcy in accordance with Chapter 11 of the U.S. Bankruptcy Code. Alto Maipo, as restructured, is considered a VIE. As the Company lacks the power to make significant decisions, it does not meet the criteria to be considered the primary beneficiary of Alto Maipo and therefore does not consolidate the entity. The Company has elected the fair value option to account for its investment in Alto Maipo as management believes this approach will better reflect the economics of its equity interest. As of March 31, 2026 and December 31, 2025, the fair value is insignificant. Alto Maipo is reported in the Renewables SBU reportable segment.

Barry — The Company holds a 100% ownership interest in AES Barry Ltd. ("Barry"), a dormant entity in the U.K. that disposed of its generation and other operating assets. Due to a debt agreement, no material financial or operating decisions can be made without the banks' consent, and the Company does not control Barry. As of March 31, 2026 and December 31, 2025, other long-term liabilities included $43 million and $44 million, respectively, related to this debt agreement. Barry is reported in the Energy Infrastructure SBU reportable segment.

OBLIGATIONS

Recourse Debt — Recourse debt represents debt that the Parent Company has an obligation to settle. This can be debt issued directly by the Parent Company or debt issued by a subsidiary under which the Parent Company has explicit commitments such as guarantees, indemnities, letters of credit, or agreements to settle if the subsidiary defaults.

Senior Notes due 2028 and 2032 — In March 2026, the Company entered into supplemental indentures with respect to its Senior Notes due 2028 and its Senior Notes due 2032 (together, the “Notes”). The supplemental indentures amend the indentures governing each series to provide that the Merger will not constitute a “Change of Control” under those indentures. The amendments will become operative only upon the consummation of the Merger and the payment of the consent fee with respect to each series of the Notes.

Senior Unsecured Term Loan due December 2026 — In October 2025, the Company executed a $300 million senior unsecured term loan agreement, maturing in December 2026. In March 2026, the Company and the lender executed an amendment providing lender consent to the consummation of the Merger. As of March 31, 2026, AES had $300 million in outstanding drawings under the loan agreement.

Senior Unsecured Term Loan due December 2026 — In June 2025, the Company executed a $500 million senior unsecured term loan agreement, maturing in June 2026. In November 2025, the Company executed an amendment extending the maturity date of the loan agreement to December 2026. In March 2026, the Company and the lender executed an amendment providing lender consent to the consummation of the Merger. As of March 31, 2026, AES had $500 million in outstanding drawings under the loan agreement.

Senior Notes due 2032 — In March 2025, the Company issued $800 million aggregate principal of 5.80% senior notes due in 2032. The Company used the proceeds from this issuance to purchase via tender offer a portion of its 3.30% senior notes due in 2025. As a result of the latter transaction, the Company recognized a gain on extinguishment of debt of $2 million.

Commercial Paper Program — In March 2023, the Company established a commercial paper program under

19 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

which the Company may issue unsecured commercial paper notes (the “Notes”) up to a maximum aggregate face amount of $750 million outstanding at any time. In April 2025, the Company executed agreements to increase the maximum aggregate face amount to $1.5 billion outstanding at any time. The maturities of the Notes may vary but will not exceed 397 days from the date of issuance. The proceeds of the Notes will be used for general corporate purposes. The Notes will be sold on customary terms in the U.S. commercial paper market on a private placement basis. The commercial paper program is backed by the Company's $1.8 billion in revolving credit facilities, and the Company cannot issue commercial paper in an aggregate amount exceeding the then available capacity under its revolving credit facilities. During the three months ended March 31, 2026, the Company borrowed approximately $15.5 billion and repaid approximately $15.5 billion under the commercial paper program, with average daily outstanding borrowings of $1.1 billion. As of March 31, 2026, the Company had $120 million in outstanding borrowings under the commercial paper program with a weighted average interest rate of 4.18%. The Notes are classified as current.

Revolving Credit Facilities — In December 2024, AES executed a $300 million senior unsecured revolving credit facility, maturing in December 2026. The aggregate commitment under its previously existing revolving credit facility is $1.5 billion and matures in August 2027. In March 2026, the Company executed amendments to each facility. Collectively, these amendments modify certain change of control provisions to permit direct or indirect ownership of the Company by Global Infrastructure Management, LLC, EQT Fund Management S.à r.l., Qatar Investment Authority, and certain investment vehicles affiliated with any of the foregoing or with funds, accounts, or other entities managed, advised, or controlled by any of the foregoing. As of March 31, 2026, AES had $445 million in outstanding drawings under its revolving credit facilities.

Non-Recourse Debt — Non-recourse debt represents debt issued by one of our subsidiaries and is only required to be repaid solely from the subsidiary's assets. Repayments of the loans, and interest thereon, are secured solely by the capital stock, physical assets, contracts, and cash flows of that subsidiary, and the Parent Company is not otherwise liable for such debt. Non-recourse debt balances on the Condensed Consolidated Balance Sheet includes $1.3 billion of current and $11.5 billion of noncurrent non-recourse debt related to VIEs as of March 31, 2026.

During the three months ended March 31, 2026, the Company’s subsidiaries did not have any significant debt issuances.

AES Pacifico Chile — During the years ended December 31, 2025 and 2024, several renewables development projects owned by AES Pacifico Chile executed project financing agreements with aggregate commitments of up to $1.7 billion to support the development and construction of wind and solar plants. As of March 31, 2026, there were $1.1 billion in borrowings under the agreements, maturing in 2029 and 2030.

AES Puerto Rico Solar — The Marahu project, 70% owned by AES, is currently constructing the Salinas and Jobos renewables projects in Puerto Rico, including both solar and energy storage facilities. In July 2025, the Marahu project executed a tax credit transfer bridge loan agreement for total commitments of $230 million, at interest rates of SOFR plus a margin of 1.25% to 2.25%, maturing in April 2027. As of March 31, 2026, there was $209 million in borrowings under the agreement.

In October 2024, the Marahu project obtained a loan guarantee for $861 million from the U.S. Department of Energy and began drawing on the loan in the first quarter of 2025. As of March 31, 2026, there was $880 million, inclusive of capitalized interest, in outstanding borrowings, maturing in 2049. The remainder of the loan will be drawn upon as required to fund construction costs.

AES Andes — In March 2025, AES Andes issued $400 million aggregate principal of 6.25% senior notes due in 2032. The net proceeds from the issuance were used to redeem the remaining $228 million aggregate principal of its 6.35% junior subordinated notes due in 2079 and to repay other existing indebtedness. As a result of the latter transaction, the Company recognized a loss on extinguishment of debt of $3 million.

AES Clean Energy — In December 2024, Bellefield 2 Seller, LLC executed a construction tax equity bridge, and letter of credit financing agreement for commitments of up to $1.7 billion. As of March 31, 2026, there were $901 million in borrowings at an interest rate of 5.07% maturing in 2026 and $381 million in borrowings under the facilities at an interest rate of 5.21%, maturing in 2027.

20 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

AES Clean Energy Development, AES Renewable Holdings, and sPower, an equity method investment, collectively referred to as the Issuers, entered into a Master Indenture agreement in 2022 whereby long-term notes will be issued from time to time to finance or refinance operating wind, solar, and energy storage projects that are owned by the Issuers. Each of the Issuers is considered a “Co-Issuer” and will be jointly and severally liable with each other Co-Issuer for all obligations under the facility. As of March 31, 2026, the aggregate principal outstanding for the Co-Issuers was $3.3 billion. The aggregate carrying amount of notes at AES Clean Energy Development and AES Renewable Holdings was $2.5 billion as of March 31, 2026.

AES Clean Energy Development, AES Renewable Holdings, and sPower, collectively referred to as the Borrowers, executed two Credit Agreements for revolving credit facilities in 2021 and subsequent amendments in the following years for aggregate commitments of up to $4 billion with maturity dates in May and June 2028. Each of the Borrowers is considered a “Co-Borrower” and will be jointly and severally liable with each other Co-Borrower for all obligations under the facilities. As a result of increases in commitments used and net of repayments, AES Clean Energy Development and AES Renewable Holdings recorded, in aggregate, an increase in liabilities of $646 million in 2026, resulting in total commitments used under the revolving credit facilities, as of March 31, 2026, of $2.3 billion at consolidated subsidiaries. As of March 31, 2026, the aggregate commitments used under the revolving credit facilities for the Co-Borrowers was $2.5 billion.

AES Puerto Rico — On June 1, 2023, AES Puerto Rico was unable to pay principal and interest obligations on its Series A Bond Loans due to insufficient funds resulting from financial difficulties at the business. AES Puerto Rico signed forbearance and standstill agreements with its noteholders in July 2023 because of the insufficiency of funds to meet these obligations. On March 5, 2024, AES Puerto Rico and its noteholders executed a financial restructuring, under which the $156 million (including interest) of 6.625% Series A Bond Loans due 2026 was exchanged for $112 million of 6.625% senior secured bonds due January 2028 and $44 million of preferred shares in AES Puerto Rico. The preferred shares bear interest at 3.125% and contains an option whereby AES may call the preferred shares to be converted into 99.9% of the ordinary shares of AES Puerto Rico between December 30, 2025 and December 30, 2027, or would have the option to settle the preferred shares in cash. AES Puerto Rico is required to make mandatory prepayments through cash sweeps based on excess cash (as defined in the loan agreements) available from operations on the senior secured bonds and preferred shares interest. The financial restructuring was accounted for as a troubled debt restructuring in accordance with ASC 470-60, “Troubled Debt Restructurings by Debtors” as AES Puerto Rico was experiencing financial difficulties and the lenders granted a concession. No gain was recognized as a result of this transaction. As of March 31, 2026, cash settlement of the preferred shares is contingent, as the amounts would not be required to be settled in cash if the option to settle the preferred shares with common shares is exercised.

Non-Recourse Debt Covenants, Restrictions, and Defaults — The terms of the Company's non-recourse debt include certain financial and nonfinancial covenants. These covenants are limited to subsidiary activity and vary among the subsidiaries. These covenants may include, but are not limited to, maintenance of certain reserves and financial ratios, minimum levels of working capital, and limitations on incurring additional indebtedness.

As of March 31, 2026 and December 31, 2025, approximately $533 million and $531 million, respectively, of restricted cash was maintained in accordance with certain covenants of the non-recourse debt agreements. Of these amounts, $422 million and $451 million, respectively, were included within Restricted cash and $111 million and $80 million, respectively, were included within Debt service reserves and other deposits in the accompanying Condensed Consolidated Balance Sheets. As of March 31, 2026 and December 31, 2025, approximately $152 million and $153 million, respectively, of the restricted cash balances were for collateral held to cover potential liability for current and future insurance claims being assumed by AGIC, AES' captive insurance company. Of total restricted cash and debt service reserves of $719 million, $393 million related to VIEs as of March 31, 2026

Various lender and governmental provisions restrict the ability of certain of the Company's subsidiaries to transfer their net assets to the Parent Company. Such restricted net assets of subsidiaries amounted to approximately $1.9 billion at March 31, 2026.

The following table summarizes the Company’s subsidiary non-recourse debt in default (in millions) as of March 31, 2026. Due to the defaults, these amounts are included in the current portion of non-recourse debt unless otherwise indicated:


Subsidiary	Primary Nature of Default	Debt in Default	Net Assets (Liabilities)


AES Ilumina (Puerto Rico)	Covenant	19	33

21 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

The above default is not a payment default, but is instead a technical default triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents of the subsidiary.

The AES Corporation’s recourse debt agreements include cross-default clauses that will trigger if a subsidiary provides 20% or more of the Parent Company’s total cash distributions from businesses for the four most recently completed fiscal quarters and has an outstanding principal in excess of $200 million in default. As of March 31, 2026, the Company’s subsidiaries had no defaults which resulted in a cross-default under the recourse debt of the Parent Company. In the event the Parent Company is not in compliance with the financial covenants of its revolving credit facility, restricted payments will be limited to regular quarterly shareholder dividends at the then-prevailing rate. Payment defaults and bankruptcy defaults would preclude the making of any restricted payments.

Supplier Financing Arrangements — With some purchases, the Company enters into supplier financing arrangements with the goal of securing improved payment terms. The Company confirms supplier invoices to an intermediary financial institution who will pay the supplier directly or reimburse the Company for payments made to the supplier. These arrangements are included in Supplier financing arrangements on the Condensed Consolidated Balance Sheets in Current liabilities as the amounts are all due in less than a year; the related interest expense is recorded on the Condensed Consolidated Statements of Operations within Interest expense.

The Company had total outstanding balances of $805 million as of March 31, 2026. These agreements ranged from less than $1 million to $63 million with a weighted average interest rate of 6.34%. Of the amounts outstanding under supplier financing arrangements as of March 31, 2026, $620 million were guaranteed, including $103 million guaranteed by the Parent Company and $517 million guaranteed by subsidiaries.

The Company had total outstanding balances of $616 million as of December 31, 2025. These agreements ranged from less than $1 million to $51 million with a weighted average interest rate of 6.72%. Of the amounts outstanding under supplier financing arrangements as of December 31, 2025, $391 million were guaranteed, including $204 million guaranteed by the Parent Company and $187 million guaranteed by subsidiaries.

COMMITMENTS AND CONTINGENCIES

Guarantees, Letters of Credit, and Surety Bonds — In connection with certain project financings (including tax equity transactions), acquisitions and dispositions, power purchases, EPC contracts, tax credit transfers, and other agreements, the Parent Company and its subsidiaries have expressly undertaken limited obligations and commitments, most of which will only be effective or will be terminated upon the occurrence of future events. In the normal course of business, the Parent Company and its subsidiaries have entered into various agreements, mainly guarantees and letters of credit, to provide financial or performance assurance to third parties on behalf of AES businesses. It is unlikely that the Parent Company or its subsidiaries would be required to perform or otherwise incur any material losses associated with guarantees of subsidiaries' or affiliates' obligations. These agreements are entered into primarily to support or enhance the creditworthiness otherwise achieved by a business on a stand-alone basis, thereby facilitating the availability of sufficient credit to accomplish their intended business purposes. Most of the contingent obligations relate to future performance commitments which the Company expects to fulfill within the normal course of business. Our tax equity and tax credit transfer guarantees typically consist of standard indemnifications of tax equity partners or tax credit purchasers in the event that an adverse determination arises due to a recapture event, tax controversy, or any breach by the AES project company of the representations in the shared equity agreement. The expiration dates of these guarantees vary from less than 1 year to no more than 26 years.

The following table summarizes the Parent Company’s consolidated contingent contractual obligations as of March 31, 2026. Amounts presented in the following table represent the Parent Company’s current undiscounted exposure to guarantees and the range of maximum undiscounted potential exposure per individual agreement. The maximum exposure is not reduced by the amounts, if any, that could be recovered under the recourse or collateralization provisions in the guarantees.


Parent Company Contingent Contractual Obligations	Maximum Exposure (in millions)		Number of Agreements	Maximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments (1)	$	3,773	24	<$1 — 1,117
Letters of credit under bilateral agreements	328		12	<$1 — 92
Letters of credit under the unsecured credit facilities	117		7	<$1 — 60
Letters of credit under the revolving credit facility	9		15	<$1 — 4


Total	$	4,227	58

22 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

(1)Excludes payment obligation and commercial transaction arrangements entered into by the Parent Company on behalf of its consolidated subsidiaries, which relate to the Company's own future performance.

The following table summarizes our subsidiaries’ consolidated contingent contractual obligations as of March 31, 2026. These contingent contractual obligations are issued at the subsidiary level and are non-recourse to the Parent Company. Amounts presented in the following table represent our subsidiaries' current undiscounted exposure to guarantees and the range of maximum undiscounted potential exposure per individual agreement. The maximum exposure is not reduced by the amounts, if any, that could be recovered under the recourse or collateralization provisions in the guarantees.


Subsidiary Contingent Contractual Obligations	Maximum Exposure (in millions)		Number of Agreements	Maximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments	$	2,503	40	< $1 — 439
Letters of credit under subsidiary credit facilities	1,955		391	< $1 — 85
Surety bonds	74		108	< $1 — 10
Total	$	4,532	539

Contingencies

Environmental — The Company periodically reviews its obligations as they relate to compliance with environmental laws, including site restoration and remediation. As of both March 31, 2026 and December 31, 2025, the Company recognized liabilities of $1 million for projected environmental remediation costs. These amounts are reported on the Condensed Consolidated Balance Sheets within Accrued and other liabilities and Other noncurrent liabilities. Due to the uncertainties associated with environmental assessment and remediation activities, future costs of compliance or remediation could be higher or lower than the amount currently accrued. Moreover, where no liability has been recognized, it is reasonably possible that the Company may be required to incur remediation costs or make expenditures in amounts that could be material but could not be estimated as of March 31, 2026. Unasserted claims are not included in the range of potential losses related to environmental matters until it is probable that a claim will be asserted and there is a reasonable possibility that the outcome will be unfavorable. In aggregate, the Company estimates the range of potential losses related to environmental matters, where estimable, to be between $1 million and $5 million. The amounts considered reasonably possible do not include amounts accrued as discussed above.

Litigation — The Company is involved in certain claims, suits, and legal proceedings in the normal course of business. The Company accrues for litigation and claims when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company has recognized aggregate liabilities for all claims of approximately $14 million and $22 million as of March 31, 2026 and December 31, 2025, respectively. These amounts are reported on the Condensed Consolidated Balance Sheets within Accrued and other liabilities and Other noncurrent liabilities. A significant portion of these accrued liabilities relate to regulatory matters and commercial disputes in international jurisdictions. There can be no assurance that these accrued liabilities will be adequate to cover all existing and future claims or that we will have the liquidity to pay such claims as they arise.

Where no accrued liability has been recognized, it is reasonably possible that some matters could be decided unfavorably to the Company and could require the Company to pay damages or make expenditures in amounts that could be material but could not be estimated as of March 31, 2026. The material contingencies where a loss is reasonably possible primarily include disputes with offtakers, suppliers and EPC contractors; alleged breaches of contract; alleged violation of laws and regulations; income tax and non-income tax matters with tax authorities (including but not limited to tax disputes in Brazil and El Salvador); and regulatory matters. In aggregate, the Company estimates the range of potential losses, where estimable, related to these reasonably possible material contingencies to be between $98 million and $171 million. Included in this range is a reasonably possible legal contingency for environmental remediation costs related to Sul, a business the Company disposed of in 2016, estimated to be approximately R$15 million to R$60 million ($3 million to $11 million). The amounts considered reasonably possible do not include the amounts accrued, as discussed above. These material contingencies do not include income tax-related contingencies which are considered part of our uncertain tax positions.

23 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

LEASES

LESSOR — The Company has operating leases for certain generation contracts that contain provisions to provide capacity to a customer, which is a stand-ready obligation to deliver energy when required by the customer. Capacity obligations are generally considered lease elements as they cover the majority of available output from a facility. The allocation of contract payments between the lease and non-lease elements is made at the inception of the lease. Lease receipts from such contracts are recognized as lease revenue on a straight-line basis over the lease term, whereas variable lease receipts are recognized when earned.

The following table presents lease revenue from operating leases in which the Company is the lessor, recognized in Revenue on the Condensed Consolidated Statements of Operations for the periods indicated (in millions):


	Three Months Ended March 31,
Operating Lease Revenue		2026		2025
Non-variable lease revenue		$	85	$	76
Variable lease revenue		17		15
Total lease revenue		$	102	$	91

The following table presents the underlying gross assets and accumulated depreciation of operating leases included in Property, plant, and equipment, net on the Condensed Consolidated Balance Sheets as of the dates indicated (in millions):


Property, Plant, and Equipment, Net	March 31, 2026		December 31, 2025
Gross assets	$	1,954	$	1,923
Less: Accumulated depreciation	(270)		(231)
Net assets	$	1,684	$	1,692

The option to extend or terminate a lease is based on customary early termination provisions in the contract, such as payment defaults, bankruptcy, or lack of performance on energy delivery. The Company has not recognized any early terminations as of March 31, 2026. Certain leases may provide for variable lease payments based on usage or index-based (e.g., the U.S. Consumer Price Index) adjustments to lease payments.

The following table shows the future lease receipts as of March 31, 2026 for the remainder of 2026 through 2030 and thereafter (in millions):


	Future Cash Receipts for
	Sales-Type Leases		Operating Leases
2026	$	48	$	77
2027	63		65
2028	63		1
2029	63		1
2030	63		—
Thereafter	943		—
Total	$	1,243	$	144
Less: Imputed interest	(646)
Present value of total lease receipts	$	597

24 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

Battery Storage Lease Arrangements — The Company constructs and operates projects consisting only of a stand-alone BESS facility, as well as projects that pair a BESS with solar energy systems. These projects allow more flexibility on when to provide energy to the grid. The Company enters into PPAs for the full output of the facility which allow customers the ability to determine when to charge and discharge the BESS. Generally, these arrangements include both lease and non-lease elements under ASC 842, with the BESS component typically constituting a sales-type lease. Losses recognized on the commencement of sales-type leases primarily relate to the exclusion of the value of ITCs from the fair value of the renewable asset, which is used in the determination of the rate implicit in the lease. This results in a higher discount rate, which reduces the lease receivable to an amount below the carrying value of the associated lease asset, resulting in a pre-tax loss on commencement.

The following table presents variable lease revenue, interest income, and losses on commencement of sales-type leases in which the Company is the lessor, for the periods indicated (in millions):


	Three Months Ended March 31,
Sales-Type Leases	2026		2025
Variable lease revenue	$	—	$	1
Interest income	9		6
Net losses on commencement of sales-types leases (1)	(44)		(9)

(1)Gains and losses are recognized in Other income and Other expense, respectively, in the Condensed Consolidated Statements of Operations. See Note 15—Other Income and Expense for further information.

REDEEMABLE STOCK OF SUBSIDIARIES

Noncontrolling interests with redemption features that are not solely within the control of the issuer are classified as temporary equity and are included in Redeemable stock of subsidiaries on the Condensed Consolidated Balance Sheets. Generally, these instruments are initially measured at fair value and are subsequently adjusted for income and dividends allocated to the noncontrolling interest. Subsequent measurement varies depending on whether the instrument is probable of becoming redeemable. For those securities that are currently redeemable or where it is probable that the instrument will become redeemable, any changes from the carrying value to redemption value are recognized in temporary equity against Retained earnings or Additional paid-in capital in the absence of retained earnings. When the instrument is not probable of becoming redeemable, no adjustment to the carrying value is recognized.

The following table is a reconciliation of changes in redeemable stock of subsidiaries for the periods indicated (in millions):


	Three Months Ended March 31,
	2026		2025
Balance at the beginning of the period	$	2,824	$	938
Net income (loss)	(1)		30


Reclassification of redeemable stock of subsidiaries to noncontrolling interests	—		(38)

Distributions to holders of redeemable stock of subsidiaries	(39)		(31)
Acquisitions of redeemable stock of subsidiaries	(1)		—


Issuance of preferred shares in subsidiaries	112		—
Balance at the end of the period	$	2,895	$	899

25 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

The following table summarizes the Company’s redeemable stock of subsidiaries balances as of the dates indicated (in millions):


	March 31, 2026		December 31, 2025
IPALCO common stock	$	1,004	$	1,003
AES Ohio common stock	605		595
AES Global Insurance preferred stock	481		472
Bellefield 2 Equity Holdings preferred stock	256		249
AES DevCo HoldCo preferred stock	204		199
Desarrollos Renovables preferred stock	192		78
AES Clean Energy tax equity partnerships	153		228
Total redeemable stock of subsidiaries	$	2,895	$	2,824

Desarrollos Renovables — In March 2026, AES Pacifico and Global Infrastructure Management, LLC (“GIP”) executed an extension of the renewables partnership originally established in the third quarter of 2025. Under the extension, AES Pacifico contributed the Cristales, Pampas, and Atacama Solar renewables projects to Desarrollos Renovables, and GIP contributed an additional $112 million to maintain its 49% ownership interest, resulting in an increase to Redeemable stock of subsidiaries. AES Pacifico retained a 51% ownership interest in Desarrollos Renovables. The agreement contains certain redemption features that expire upon certain agreed-upon project milestones being achieved. While not currently in effect, the redemption features are not solely in AES’ control. As a result, the noncontrolling ownership interest is considered temporary equity. The Company has concluded it is probable that these projects will reach the specified milestones. Therefore, the noncontrolling ownership interests are not probable of becoming redeemable and subsequent adjustments to the carrying value were not required. Desarrollos Renovables is reported in the Renewables SBU reportable segment.

AES Clean Energy Tax Equity Partnerships — The majority of solar projects in the U.S. have been financed with tax equity structures, in which tax equity investors receive a portion of the economic attributes of the facilities, including tax attributes, which vary over the life of the projects. The substance of such arrangements is that of a preferred structure, whereby tax equity investors are granted preferential returns in the form of significant earnings and tax allocations from the partnership, until a specified internal rate of return is achieved.

In some cases, these agreements contain certain partnership rights, though not currently in effect, which may enable the tax equity investor to exit in the future. As a result, the noncontrolling ownership interest is considered temporary equity. Some of these tax equity partnership agreements have redemption features dependent upon the passage of time, therefore the noncontrolling ownership interests are probable of becoming redeemable. As of March 31, 2026, the carrying values of these noncontrolling ownership interests exceeded the redemption values, therefore no adjustments to the carrying values were necessary. Certain other tax equity partnership agreements have redemption features that expire upon certain agreed-upon project milestones being achieved. The Company has concluded it is probable that these projects will reach the specified milestones, therefore the noncontrolling ownership interests are not probable of becoming redeemable and subsequent adjustments to the carrying value were not required.

AES Indiana Pike County BESS — The redemption feature of the tax equity partnership agreement was contingent upon the underlying assets being placed in service by a guaranteed date. In March 2025, the Pike County BESS project was placed in service, resulting in the expiration of the redemption feature. As a result, the noncontrolling ownership interest of $38 million was reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Condensed Consolidated Balance Sheets. AES Indiana is reported in the Utilities SBU reportable segment.

EQUITY

Equity Transactions with Noncontrolling Interests

Cochrane — In February 2026, AES Andes acquired all of the outstanding preferred shares in Cochrane for $29 million, increasing AES’ effective ownership in Cochrane to 99.6%. Cochrane is reported in the Energy Infrastructure SBU reportable segment.

AES Indiana Petersburg Energy Center — In February 2026, AES Indiana sold additional noncontrolling interests in the Petersburg Energy Center project to the tax equity investor, resulting in a $120 million increase to NCI. AES Indiana is reported in the Utilities SBU reportable segment.

AES Clean Energy Tax Equity Partnerships — The majority of solar projects in the U.S. have been financed with tax equity structures, in which tax equity investors receive a portion of the economic attributes of the facilities,

26 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

including tax attributes, which vary over the life of the projects. The substance of such arrangements is that of a preferred structure, whereby tax equity investors are granted preferential returns in the form of significant earnings and tax allocations from the partnership, until a specified internal rate of return is achieved.

During the three months ended March 31, 2025, AES Renewable Holdings sold a noncontrolling interest in the Rexford project company to a tax equity investor, resulting in an increase to NCI of $82 million. AES Renewable Holdings is reported in the Renewables SBU reportable segment.

AES Indiana Pike County BESS — In March 2025, as a result of the Pike County BESS project being placed in service, the noncontrolling ownership interest of $38 million was reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Condensed Consolidated Balance Sheets. See Note 11—Redeemable Stock of Subsidiaries for further information. Subsequently, AES Indiana sold additional noncontrolling interests to the tax equity investor, resulting in a $150 million increase to NCI. AES Indiana is reported in the Utilities SBU reportable segment.

Chile Renovables — In December 2023, Chile Renovables issued $275 million of preferred shares to Global Infrastructure Management, LLC (“GIP”), the proceeds of which are being used to fund the development of an additional pipeline of renewables projects. Under the terms of the operating agreement, GIP receives an escalating specified internal rate of return up until the point the projects reach commercial operations. As each project reaches commercial operations, the preferred shares convert to common stock and GIP may make additional contributions to maintain its 49% ownership interest. In February 2025, the Andes Solar 2a BESS project reached commercial operations. The preferred shares were converted to common stock and GIP made additional contributions of $14 million, resulting in an increase to NCI of $17 million and a decrease to additional paid-in capital of $3 million.

As the Company maintained control after these transactions, Chile Renovables continues to be consolidated by the Company within the Renewables SBU reportable segment.

The following table summarizes the net income (loss) attributable to The AES Corporation and all transfers (to) from noncontrolling interests for the periods indicated (in millions):


	Three Months Ended March 31,
	2026		2025
Net income attributable to The AES Corporation	$	487	$	46
Transfers (to) from noncontrolling interest:
Increase (decrease) in The AES Corporation's paid-in capital for sale of subsidiary shares	(1)		(15)
Increase (decrease) in The AES Corporation's paid-in capital for acquisition of subsidiary shares	(1)		—
Net transfers (to) from noncontrolling interest	(2)		(15)
Change from net income attributable to The AES Corporation and transfers (to) from noncontrolling interests	$	485	$	31

Accumulated Other Comprehensive Loss — The following table summarizes the changes in AOCL by component, net of tax and NCI, for the three months ended March 31, 2026 (in millions):


	Foreign currency translation adjustments, net		Change in fair value of derivatives, net		Pension adjustments, net		Change in fair value option liabilities, net		Total
Balance at the beginning of the period	$	(1,168)	$	483	$	(16)	$	3	$	(698)
Other comprehensive income before reclassifications	2		3		—		—		5
Amount reclassified to earnings	—		(4)		—		—		(4)
Other comprehensive income (loss)	2		(1)		—		—		1
Reclassification from NCI due to share repurchases	—		1		—		—		1
Balance at the end of the period	$	(1,166)	$	483	$	(16)	$	3	$	(696)

27 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

Reclassifications out of AOCL are presented in the following table. The Company’s accounting policy for releasing the income tax effects from AOCL occurs on a portfolio basis. Amounts for the periods indicated are in millions and those in parentheses indicate debits to the Condensed Consolidated Statements of Operations:


AOCL Components			Three Months Ended March 31,
		2026		2025





Change in fair value of derivatives, net
	Non-regulated revenue				$	1	$	—
	Non-regulated cost of sales				(2)		1
	Interest expense				(2)		16


	Foreign currency transaction gains (losses)				2		3
	Income (loss) from continuing operations before taxes and equity in earnings of affiliates				(1)		20
	Income tax benefit (expense)				(1)		(6)


	Net income (loss)				(2)		14
	Less: Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries				6		1
	Net income (loss) attributable to The AES Corporation				$	4	$	15

Common Stock Dividends — The Parent Company paid dividends of $0.17595 per outstanding share to its common stockholders during the first quarter of 2026 for dividends declared in December 2025.

On February 19, 2026, the Board of Directors declared a quarterly common stock dividend of $0.17595 per share payable on May 15, 2026 to shareholders of record at the close of business on May 1, 2026.

SEGMENTS

The segment reporting structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses internally. The management reporting structure is composed of four SBUs, mainly organized by technology, led by our Chief Executive Officer, who is our Chief Operating Decision Maker. Using the accounting guidance on segment reporting, the Company determined that its four operating segments are aligned with its four reportable segments corresponding to its SBUs. In March 2026, the Company announced changes in its internal management structure, including a change in its President. These changes did not result in a change to our Chief Operating Decision Maker or to the Company’s operating or reportable segments.

*•*Renewables — Solar, wind, energy storage, and hydro generation facilities;

*•*Utilities — AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities;

*•*Energy Infrastructure — Natural gas, LNG, coal, pet coke, diesel, and oil generation facilities; and

*•*New Energy Technologies — Investments in Fluence, Maximo, the AI Fund, and other new and innovative energy technology businesses.

Our Renewables, Utilities, and Energy Infrastructure SBUs participate in our generation business line, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. Our Utilities SBU participates in our utilities business line, in which we own and/or operate utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors within a defined service area. In certain circumstances, our utilities also generate and sell electricity on the wholesale market. Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions.

Included in “Corporate and Other” are the results of AES Global Insurance Company, LLC ("AGIC"), AES' captive insurance company, corporate overhead costs which are not directly associated with the operations of our four reportable segments, and certain intercompany charges such as self-insurance premiums which are fully eliminated in consolidation.

The Company uses Adjusted EBITDA as its primary segment performance measure. Adjusted EBITDA, a non-GAAP measure, is defined by the Company as earnings before interest income and expense, taxes, depreciation, amortization, and accretion of AROs, adjusted for the impact of NCI and interest, taxes, depreciation, amortization, and accretion of AROs of our equity affiliates, and adding back interest income recognized under service concession arrangements; excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses;

28 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

(c) gains, losses, benefits, and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses, and costs due to the early retirement of debt or troubled debt restructuring; (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts; and (g) costs directly associated with the Merger, including, but not limited to, advisory, legal, and employee-related costs.

The Company has concluded 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. Additionally, given its large number of businesses and overall complexity, the Company concluded that Adjusted EBITDA is a more transparent measure that better assists investors in determining which businesses have the greatest impact on the Company's results. The Chief Operating Decision Maker uses Adjusted EBITDA to allocate resources and capital for each segment in the annual budget and forecasting process, including making decisions on where to reinvest profits to support segment growth. On a monthly basis, the Chief Operating Decision Maker reviews variances in budget versus actual Adjusted EBITDA and monitors changes in forecasted Adjusted EBITDA to assess the underlying operating performance and analyze risks and opportunities at each segment.

Revenue and Adjusted EBITDA are presented before inter-segment eliminations, which includes the effect of intercompany transactions with other segments except for charges for certain management fees and the write-off of intercompany balances, as applicable. All intra-segment activity has been eliminated within the segment. Inter-segment activity has been eliminated within the total consolidated results.

The following tables present financial information by segment for the periods indicated (in millions):


	Three Months Ended March 31, 2026
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Total
Revenue	$	820	$	1,136	$	1,256	$	—	$	3,212
Corporate and other									29
Eliminations									(61)
Total Revenue									$	3,180
Less:
Total cost of sales excluding depreciation, amortization, and accretion of AROs (1)	477		766		943		3
Other segment items (2)	74		101		7		18
Segment Adjusted EBITDA	$	269	$	269	$	306	$	(21)	$	823
Reconciliation to income from continuing operations before taxes:
Corporate and other									(1)
Eliminations									5
Interest expense									(353)
Interest income									65
Depreciation, amortization, and accretion of AROs									(433)
Adjusted for:
Noncontrolling interests and redeemable stock of subsidiaries									232
Income tax expense (benefit), interest expense (income), and depreciation, amortization, and accretion of AROs from equity affiliates									(33)
Interest income recognized under service concession arrangements									(13)
Unrealized derivatives, equity securities, and financial assets and liabilities gains									7
Unrealized foreign currency gains									20
Disposition/acquisition losses									(53)
Impairment losses									(10)
Loss on extinguishment of debt and troubled debt restructuring									(8)

Merger costs									(14)
Income from continuing operations before taxes									$	234

(1)Segment-level total cost of sales excluding depreciation, amortization, and accretion of AROs is considered regularly provided to the Chief Operating Decision Maker. Total cost of sales excluding depreciation, amortization, and accretion of AROs includes items such as fuel cost, electricity purchases, transmission charges, supplies, salaries and wages, consulting costs, IT costs, market fees, insurance, and lease expense.

(2)Other segment items for each reportable segment includes:

Renewables SBU — business development costs, miscellaneous gains and losses in Other income and Other expense, realized foreign currency gains and losses, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

Utilities SBU — miscellaneous gains and losses in Other income and Other expense, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

29 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

Energy Infrastructure SBU — service concession interest income, business development costs, miscellaneous gains and losses in Other income and Other expense, realized foreign currency gains and losses, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

New Energy Technologies SBU — business development costs, earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.


	Three Months Ended March 31, 2025
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Total
Revenue	$	666	$	1,009	$	1,320	$	—	$	2,995
Corporate and other									36
Eliminations									(105)
Total Revenue									$	2,926
Less:
Total cost of sales excluding depreciation, amortization, and accretion of AROs (1)	466		730		1,050		(1)
Other segment items (2)	39		56		16		26
Segment Adjusted EBITDA	$	161	$	223	$	254	$	(25)	$	613
Reconciliation to income from continuing operations before taxes:
Corporate and other									(24)
Eliminations									2
Interest expense									(342)
Interest income									69
Depreciation, amortization, and accretion of AROs									(337)
Adjusted for:
Noncontrolling interests and redeemable stock of subsidiaries									134
Income tax expense (benefit), interest expense (income), and depreciation, amortization, and accretion of AROs from equity affiliates									(36)
Interest income recognized under service concession arrangements									(15)
Unrealized derivatives, equity securities, and financial assets and liabilities gains									1
Unrealized foreign currency losses									7
Disposition/acquisition losses									(41)
Impairment losses									(33)
Loss on extinguishment of debt and troubled debt restructuring									(8)
Restructuring costs									(46)

Loss from continuing operations before taxes									$	(56)

(2)Other segment items for each reportable segment includes:

Utilities SBU — miscellaneous gains and losses in Other income and Other expense, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

New Energy Technologies SBU — business development costs, earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.

30 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

The Company uses long-lived assets as its measure of segment assets. Long-lived assets include amounts recorded in Property, plant, and equipment, net and right-of-use assets for operating leases recorded in Other noncurrent assets on the Condensed Consolidated Balance Sheets.


Long-Lived Assets	March 31, 2026		December 31, 2025
Renewables SBU	$	25,353	$	23,945
Utilities SBU	9,652		9,464
Energy Infrastructure SBU	4,638		4,726
New Energy Technologies SBU	25		23

Corporate and Other	34		29
Long-Lived Assets	39,702		38,187
Current assets	6,110		6,502
Investments in and advances to affiliates	1,006		1,004
Debt service reserves and other deposits	120		89
Goodwill	342		342
Other intangible assets	2,019		2,040
Deferred income taxes	425		397
Loan receivable	730		755
Other noncurrent assets, excluding right-of-use assets for operating leases	2,365		2,452

Total Assets	$	52,819	$	51,768


	Depreciation, Amortization, and Accretion of AROs				Capital Expenditures
Three Months Ended March 31,	2026		2025		2026		2025
Renewables SBU	$	181	$	129	$	1,411	$	970
Utilities SBU	136		124		366		260
Energy Infrastructure SBU	112		81		28		28
New Energy Technologies SBU	1		—		1		1
Corporate and Other	3		3		4		2
Total	$	433	$	337	$	1,810	$	1,261


	Interest Income				Interest Expense				Net Equity in Earnings (Losses) of Affiliates
Three Months Ended March 31,	2026		2025		2026		2025		2026		2025
Renewables SBU	$	25	$	21	$	125	$	131	$	(7)	$	(9)
Utilities SBU	2		2		77		77		2		2
Energy Infrastructure SBU	35		41		65		74		15		4
New Energy Technologies SBU	—		2		—		—		(17)		(27)
Corporate and Other	3		3		86		60		(1)		(4)
Total	$	65	$	69	$	353	$	342	$	(8)	$	(34)

31 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

REVENUE

The following table presents our revenue from contracts with customers and other revenue for the periods indicated (in millions):



	Three Months Ended March 31, 2026
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	754	$	21	$	1,157	$	—	$	(32)	$	1,900


Other non-regulated revenue (1)	66		1		99		—		—		166
Total non-regulated revenue	820		22		1,256		—		(32)		2,066
Regulated Revenue
Revenue from contracts with customers	—		1,105		—		—		—		1,105

Other regulated revenue	—		9		—		—		—		9
Total regulated revenue	—		1,114		—		—		—		1,114
Total revenue	$	820	$	1,136	$	1,256	$	—	$	(32)	$	3,180

	Three Months Ended March 31, 2025
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	620	$	23	$	1,222	$	—	$	(69)	$	1,796


Other non-regulated revenue (1)	46		1		98		—		—		145
Total non-regulated revenue	666		24		1,320		—		(69)		1,941
Regulated Revenue
Revenue from contracts with customers	—		976		—		—		—		976

Other regulated revenue	—		9		—		—		—		9
Total regulated revenue	—		985		—		—		—		985
Total revenue	$	666	$	1,009	$	1,320	$	—	$	(69)	$	2,926

(1) Other non-regulated revenue primarily includes lease and derivative revenue not accounted for under ASC 606.

Contract Balances — The timing of revenue recognition, billings, and cash collections results in accounts receivable and contract liabilities. The contract liabilities from contracts with customers were $324 million and $374 million as of March 31, 2026 and December 31, 2025, respectively.

During the three months ended March 31, 2026 and 2025, we recognized revenue of $85 million and $7 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods.

A significant financing arrangement exists for our Mong Duong plant in Vietnam. The plant was constructed under a BOT contract and sold to the Vietnamese government, while we remain the operator for the duration of the 25-year PPA. The performance obligation to construct the facility was substantially completed in 2015. Contract consideration related to the construction, but not yet collected through the 25-year PPA, was reflected on the Condensed Consolidated Balance Sheet. As of March 31, 2026 and December 31, 2025, the loan receivable balance was $831 million and $862 million, respectively. Of these amounts, $101 million and $107 million were classified in Other current assets, and $730 million and $755 million in Loan receivable on the Condensed Consolidated Balance Sheets, respectively.

Remaining Performance Obligations — The transaction price allocated to remaining performance obligations represents future revenue for unsatisfied (or partially unsatisfied) performance obligations at the end of the reporting period. As of March 31, 2026, the aggregate amount of transaction price allocated to remaining performance obligations was $322 million, primarily consisting of fixed consideration in development services contracts in the U.S., of which $183 million has been collected. We expect to recognize revenue of approximately $190 million in the remainder of 2026, $127 million in 2027, and the remainder thereafter.

OTHER INCOME AND EXPENSE

Other income generally includes gains on insurance recoveries in excess of property damage, gains on asset sales and liability extinguishments, favorable judgments on contingencies, allowance for funds used during construction, gains on contingent consideration remeasurement, and other income from miscellaneous transactions. Other expense generally includes losses on asset sales and dispositions, losses on legal contingencies, losses on

32 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

remeasurement of contingent consideration, losses at commencement of sales-type leases, and losses from other miscellaneous transactions. The components are summarized as follows (in millions):


		Three Months Ended March 31,
			2026		2025
Other Income	Gain on remeasurement of contingent consideration (1)		$	2	$	1
	AFUDC (US Utilities)		2		1
	Gain on sale and disposal of assets		2		—




	Dividend income on investments		2		—








	Other income		4		5
	Total other income		$	12	$	7


Other Expense	Loss on commencement of sales-type leases (2)		$	44	$	9

	Loss on remeasurement of contingent consideration (1)		8		39
	Loss on sale and disposal of assets		1		3






	Other		5		1
	Total other expense		$	58	$	52

(1) Related to certain remeasurements of contingent consideration, primarily on projects acquired at AES Clean Energy. See Note 3—Fair Value for further information about remeasurement to fair value.

(2) Related to losses recognized at commencement of sales-type leases at AES Clean Energy. See Note 10—Leases for further information.

ASSET IMPAIRMENT EXPENSE

The following table presents our asset impairment expense for the periods indicated (in millions):


	Three Months Ended March 31,
		2026		2025


AES Clean Energy Development Projects		$	6	$	31
Mong Duong		—		17














Other		6		1
Total		$	12	$	49

AES Clean Energy Development Projects — AES Clean Energy Development has a pipeline of U.S. renewables projects that are in various stages of development and construction. In some cases, if development efforts are not successful, the Company may abandon a particular project, writing off all the intangible assets and capitalized development costs incurred. The fair value of each abandoned project with no salvage value is determined to be zero as there are no future projected cash flows. The Company recognized $6 million and $31 million of pre-tax asset impairment expense related to the write-off of projects that were determined to be no longer viable during the three months ended March 31, 2026 and 2025, respectively. AES Clean Energy Development is reported in the Renewables SBU reportable segment.

Mong Duong — In November 2023, the Company entered into an agreement to sell its entire 51% ownership interest in Mong Duong 2, a coal-fired plant in Vietnam, and 51% equity interest in Mong Duong Finance Holdings B.V., an SPV accounted for as an equity affiliate (collectively "Mong Duong"). The carrying amount of the Mong Duong disposal group, which primarily consisted of our loan receivable from the sale of the power plant to the Vietnamese government, in subsequent periods exceeded the expected sales proceeds and as a result, the Company recognized pre-tax impairment expense of $17 million during the three months ended March 31, 2025. See Note 18—Held-for-Sale and Dispositions for further information. Mong Duong is reported in the Energy Infrastructure SBU reportable segment.

INCOME TAXES

The Company’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items. The effective tax rates for the three months ended March 31, 2026 and 2025 were (17)% and (77)%, respectively. The difference between the Company’s effective tax rates for the 2026 and 2025 periods and the U.S. statutory tax rate of 21% related primarily to foreign tax rate differentials, the impacts of foreign currency fluctuations at certain foreign subsidiaries, nondeductible expenses, valuation allowance, the impacts of U.S. investment tax credits (“ITCs”), and noncontrolling interest in our U.S. subsidiaries.

For the three months ended March 31, 2026, the Company recorded discrete tax benefit of approximately $27 million associated with the merger of Cochrane into AES Andes and discrete tax expense of approximately $36 million resulting from allocations of losses to tax equity investors on renewables projects.

33 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

For the three months ended March 31, 2025, the Company recognized discrete tax expense of approximately $26 million resulting from allocations of losses to tax equity investors on renewables projects.

HELD-FOR-SALE AND DISPOSITIONS

Held-for-Sale

JK Projects — In April 2025, the Company executed an agreement to contribute the Jemeiwaa Ka’I wind projects (“JK Projects”) to two trusts. After closing the transaction, the Company will retain 51% ownership in the trusts, which will be accounted for as equity method investments. The transaction is expected to close in 2026. As a result, the JK Projects were classified as held-for-sale but did not meet the criteria to be reported as discontinued operations. Since the fair value exceeded the carrying value, no impairment was recorded. On a consolidated basis, the carrying value of the JK Projects as of March 31, 2026 was $48 million, including $20 million of intangible assets and $18 million of CWIP. The JK Projects are reported in the Renewables SBU reportable segment.

Mong Duong — In November 2023, the Company entered into an agreement to sell its entire 51% ownership interest in Mong Duong 2, a coal-fired plant in Vietnam, and 51% equity interest in Mong Duong Finance Holdings B.V., an SPV accounted for as an equity affiliate (collectively "Mong Duong"). The sale was subject to regulatory approval and, as of March 31, 2025, Mong Duong was classified as held-for-sale but did not meet the criteria to be reported as discontinued operations. Since the carrying value exceeded the fair value less cost to sell, the Company recognized pre-tax impairment expense of $17 million during the three months ended March 31, 2025. The agreement expired in November 2025 and the sale did not close, therefore Mong Duong was classified as held and used as of March 31, 2026. See Note 16*—Asset Impairment Expense* for further information. Mong Duong is reported in the Energy Infrastructure SBU reportable segment.

Dispositions

Ventanas — In January 2025, the Company completed the sale of its 100% ownership interest in Empresa Electrica Ventanas SpA and Nucleo SpA (collectively “Ventanas”), owner of a coal-fired energy generation facility in Chile, for $5 million. An immaterial loss on sale was recognized during the three months ended March 31, 2025 as a result of this transaction. The sale did not meet the criteria to be reported as discontinued operations. Prior to its sale, Ventanas was reported in the Energy Infrastructure SBU reportable segment.

EARNINGS PER SHARE

Basic and diluted earnings per share are based on the weighted average number of shares of common stock and potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted earnings per share, includes the effects of dilutive RSUs and stock options. The effect of such potential common stock is computed using the treasury stock method.

The following table is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computation for income from continuing operations for the three months ended March 31, 2026 and 2025, where income represents the numerator and weighted-average shares represent the denominator.


Three Months Ended March 31,	2026					2025
(in millions, except per share data)	Income		Shares	$ per Share		Income		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income from continuing operations attributable to The AES Corporation common stockholders	$	487	713	$	0.68	$	46	711	$	0.07



EFFECT OF DILUTIVE SECURITIES


Restricted stock units	—		2	—		—		2	—

DILUTED EARNINGS PER SHARE	$	487	715	$	0.68	$	46	713	$	0.07

Anti-Dilutive Securities — The calculation of diluted earnings per share excluded 3 million outstanding stock awards for both the three months ended March 31, 2026 and 2025, which would be anti-dilutive. These stock awards could potentially dilute basic earnings per share in the future.

34 | Notes to Condensed Consolidated Financial Statements | March 31, 2026 and 2025

AES Global Insurance — As described in Note 11*—Redeemable Stock of Subsidiaries*, on April 30, 2025, the Company sold noncontrolling interests in the AGIC Companies. It is required that either (i) the AGIC Companies achieve a minimum distribution target to the Class B Member ranging from $146 million to $199 million over pre-defined periods of time ranging from three to five years (the “distribution period”) or (ii) AGIC achieves an average cash basis quarterly net income threshold for the period comprising the relevant distribution period and the four quarters immediately prior to the start of such distribution period. AES can make disproportionate distributions to the Class B Member to meet the minimum distribution target for the distribution period. If, at the end of a distribution period, (1) such cash basis net income threshold is not met and (2) the minimum distribution target for such distribution period is not achieved, AES would be required to address the shortfall by issuing AES common stock (“Shortfall Stock”) to AGIC for the net difference between actual and targeted distributions. If AES is required to issue Shortfall Stock, the amount will be based upon the number of shares multiplied by the then current share price to equal the net difference between actual and targeted distributions. Distributions of cash from the sale of Shortfall Stock are subject to regulatory approval and at the discretion of AES.

As part of the quarterly diluted earnings per share calculation, AES evaluates whether (1) average cash basis quarterly net income in a given quarter exceeds the threshold or (2) aggregate distributions made to the investor for the related distribution period exceed such target distribution amount. If either condition is met, no Shortfall Stock will be included in the diluted earnings per share calculation. As of March 31, 2026, the average cash basis quarterly net income condition was met, and therefore, no shares are included in the calculation of diluted EPS.

RESTRUCTURING

In February 2025, the Company approved and initiated a restructuring program to streamline our organization given the significantly lower number of countries that we operate in. Additionally, we right-sized our development company to focus on executing on the backlog and pursuing larger but fewer projects to better serve our core customers. No restructuring charges were recognized during the three months ended March 31, 2026. From inception, the cumulative amount of restructuring costs incurred to date as of March 31, 2026 was $54 million.

During the three months ended March 31, 2025, pre-tax restructuring charges related to employee severance costs were $48 million, of which $40 million was classified within Cost of sales and $8 million was classified as General and administrative expenses on the Condensed Consolidated Statements of Operations. During the three months ended March 31, 2025, $17 million was recognized at the Energy Infrastructure SBU, $16 million at the Renewables SBU, $5 million at the Utilities SBU, and $10 million at Corporate and Other.

As of December 31, 2025, $5 million of pre-tax restructuring charges were reflected within Accrued and other liabilities on the Condensed Consolidated Balance Sheets. During the three months ended March 31, 2026, the Company made cash payments of $3 million. As of March 31, 2026, $2 million of pre-tax restructuring charges were reflected within Accrued and other liabilities on the Condensed Consolidated Balance Sheets.

35 | The AES Corporation | March 31, 2026 Form 10-Q

Previous: Cover and table of contents · Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS