Highlights
- Reaffirming 2015 Adjusted EPS guidance
range of $1.25-$1.35 and 2015 Proportional Free Cash Flow guidance
range of $1,000-$1,350 million
- In the second half of the year, the
Company's financial performance is expected to benefit from lower
planned maintenance, improved hydrology and higher collections
- 5,839 MW currently under construction
and on track to come on-line through 2018
- Commissioned the 1,240 MW Mong Duong 2
power plant in Vietnam
- Broke ground on three new energy
storage projects totaling 40 MW in the United States, the
Netherlands and the United Kingdom
- Year-to-date, invested $335 million in
repurchasing 26 million shares
- Invested $345 million to prepay and
refinance Parent debt
- Forming a new 50/50 joint venture with
Grupo BAL to co-invest in growth projects in Mexico
The AES Corporation (NYSE:AES) today reported Adjusted Earnings
Per Share (Adjusted EPS, a non-GAAP financial measure) of $0.25 for
the second quarter of 2015, a decrease of $0.03 from second quarter
2014, mainly due to the timing of planned maintenance at certain
businesses, a stronger US Dollar, lower demand and contracting
strategy in Brazil, as well as the $0.02 net impact from the
reversal of liabilities in Brazil and Europe. These negative
impacts were largely offset by improved hydrology in Panama and
Colombia, the Company's capital allocations and a lower adjusted
effective tax rate of 30% in 2015 versus 40% in 2014.
Second quarter 2015 Diluted Earnings Per Share from Continuing
Operations was $0.10, a decrease of $0.10 from second quarter 2014,
largely driven by increased debt extinguishment expense of $0.11
primarily related to costs incurred to retire and refinance
expensive near-term debt maturities.
Second quarter 2015 Proportional Free Cash Flow (a non-GAAP
financial measure) was $62 million, an increase of $15 million from
second quarter 2014, primarily driven by lower Parent interest and
improved working capital and hydrological conditions at the
Company's Mexico, Central America and the Caribbean Strategic
Business Unit (MCAC SBU). This was partially offset by a higher tax
payment at Chivor in Colombia and unfavorable hydrological
conditions at the Company's generation business, Tiete, in
Brazil.
"Despite significant macroeconomic challenges, we are on track
to achieve our financial and strategic objectives. Earlier this
year, we brought on-line our Mong Duong plant in Vietnam six months
early. Our remaining 6 GW of projects under construction are on
schedule and will drive our earnings and cash flow growth through
2018," said Andrés Gluski, AES President and Chief Executive
Officer. "I am very pleased to announce our joint venture with
Grupo BAL, one of the largest and most respected business groups in
Mexico, to co-invest in new power and infrastructure projects. We
have had a very successful business in Mexico for more than 15
years and now with Grupo BAL, we are poised to take advantage of
the opening of the energy market."
"Our year-to-date results, and the reaffirmation of our full
year guidance, demonstrate the benefits of our proactive actions to
mitigate the impact from currency devaluation and macro factors
that we have experienced in the last several months," said Tom
O'Flynn, AES Executive Vice President and Chief Financial Officer.
"Our portfolio continues to generate strong and growing cash flow.
This year, with share repurchases to date and planned dividend
payments, we expect to return $700 million to our
shareholders."
Table 1: Key Financial Results
Second Quarter
Year-to-dateJune 30,
Full Year 2015 Guidance $ in Millions, Except Per Share
Amounts
2015 2014
2015 2014 Adjusted EPS1 $ 0.25 $
0.28 $ 0.50 $ 0.53 $1.25-$1.35 Diluted EPS from Continuing
Operations $ 0.10 $ 0.20 $ 0.30 $ 0.13 N/A Proportional Free Cash
Flow1,2 $ 62 $ 47 $ 327 $ 176 $1,000-$1,350 Consolidated Net Cash
Provided by Operating Activities $ 153 $ 232
$ 590 $ 453 $1,900-$2,700
1 A non-GAAP financial measure. See “Non-GAAP Financial
Measures” for definitions and reconciliations to the most
comparable GAAP financial measures. 2 Defined as Proportional Net
Cash Provided by Operating Activities, less Maintenance Capex,
which includes non-recoverable environmental capex. Beginning in Q1
2015, the definition was revised to also exclude cash flows related
to service concession assets.
Discussion of Operating Drivers of Adjusted Pre-Tax
Contribution (Adjusted PTC, a non-GAAP financial measure) and
Adjusted EPS
The Company manages its portfolio in six market-oriented
Strategic Business Units (SBUs): US (United States), Andes (Chile,
Colombia and Argentina), Brazil, MCAC (Mexico, Central America and
Caribbean), Europe, and Asia.
Table 2: Adjusted
PTC1 by SBU and Adjusted EPS1
$ in Millions, Except Per Share Amounts
Second
Quarter Year-to-date June 30, 2015
2014 Variance 2015 2014
Variance US $ 56 $ 80 $ (24 ) $ 162
$ 155 $ 7 Andes 81 104 (23 ) $ 172 $ 157 $ 15 Brazil
41 115 (74 ) $ 62 $ 184 $ (122 ) MCAC 106 95 11 $ 156 $ 160 $ (4 )
Europe 41 73 (32 ) $ 126 $ 188 $ (62 ) Asia 30
23 7 $ 42 $ 31
$ 11
Total SBUs $ 355 $ 490 $ (135 ) $ 720 $
875 $ (155 ) Corp/Other (104 ) (150 ) 46
$ (217 ) $ (292 ) $ 75
Total
AES Adjusted PTC1,2 $ 251 $
340 $ (89 ) $ 503
$ 583 $ (80 ) Adjusted Effective
Tax Rate 30 % 40 % 31 % 36 % Diluted Share Count 695 728 701 728
Adjusted EPS1
$ 0.25 $
0.28 $ (0.03 )
$ 0.50 $ 0.53
$ (0.03 ) 1 A
non-GAAP financial measure. See “Non-GAAP Financial Measures” for
definitions and reconciliations to the most comparable GAAP
financial measures. 2 Includes $5 million and $9 million of
after-tax adjusted equity in earnings for second quarter 2015 and
2014, respectively. Includes $18 million and $31 million of
after-tax adjusted equity in earnings for year-to-date June 30,
2015 and 2014, respectively.
For the three months ended June 30, 2015, Adjusted EPS decreased
$0.03 to $0.25, as described above. Second quarter 2015 Adjusted
PTC decreased $89 million to $251 million. Key operating drivers of
Adjusted PTC included:
- US: A decrease of $24 million,
primarily driven by planned maintenance in Hawaii, lower wholesale
margins at IPL and lower generation at the Company's wind
businesses in 2015, partially offset by lower fixed costs and
higher capacity prices at DPL.
- Andes: A decrease of $23
million, primarily due to the timing of planned maintenance in
Argentina and Chile in 2015, as well as a weaker Colombian Peso,
partially offset by higher generation at Chivor in Colombia as a
result of improved inflows.
- Brazil: A decrease of $74
million, primarily driven by a weaker Brazilian Real, the reversal
of a $47 million contingency at Sul in 2014, as well as lower spot
sales and a higher proportion of contracted sales associated with
unfavorable hydrological conditions at Tiete in 2015. This
performance was partially offset by the favorable reversal of a
contingent liability in 2015 and a favorable tariff adjustment at
Eletropaulo of $26 million.
- MCAC: An increase of $11
million, primarily driven by improved hydrological conditions,
which resulted in higher generation and lower energy purchases, as
well as the commencement of operations of the 72 MW fuel oil-fired
Estrella de Mar power barge in Panama. These positive results were
offset by lower availability in Mexico and the Dominican
Republic.
- Europe: A decrease of $32
million, driven by lower spot prices, lower dispatch and the timing
of planned maintenance and related costs at Kilroot in the United
Kingdom and the favorable reversal of a liability in Kazakhstan in
2014.
- Asia: An increase of $7 million,
due to the early commencement of operations at Mong Duong in
Vietnam, partially offset by the sale of a minority interest in
Masinloc in the Philippines in the second half of 2014.
- Corp/Other: An improvement of
$46 million, primarily driven by lower Parent interest expense as a
result of the reduction in recourse debt of $770 million, as well
as realized foreign currency gains associated with the Company's
corporate hedging program.
For the six months ended June 30, 2015, Adjusted EPS decreased
$0.03, to $0.50, largely driven by lower demand and contracting
strategy in Brazil, a stronger US Dollar, as well as the $0.02 net
impact from the reversal of liabilities in Brazil and Europe. These
negative impacts were largely offset by a lower adjusted effective
tax rate of 31% in 2015 versus 36% in 2014, the contributions from
new businesses that came on-line in the first half of 2015 and the
Company's capital allocations. Year-to-date 2015 Adjusted EPS of
$0.50 represents 38% of the mid-point of full year guidance of
$1.25-$1.35 per share. In the first half of 2014, the Company
earned 40% of full year 2014 Adjusted EPS of $1.30.
Year-to-date 2015 Adjusted PTC decreased $80 million to $503
million. Key operating drivers of Adjusted PTC included:
- US: An increase of $7 million,
primarily driven by better availability at DPL as a result of
temporary forced outages and a lack of available gas at a couple of
its generation plants in 2014 that did not recur, as well as lower
fixed costs in 2015. These positive results were offset by lower
generation as a result of lower wind resources at the Company's
wind businesses in 2015.
- Andes: An increase of $15
million, primarily due to higher spot sales in Chile, higher
generation at Chivor in Colombia and higher interest on receivables
in Argentina, partially offset by a weaker Colombian Peso and
higher maintenance costs in Argentina.
- Brazil: A decrease of $122
million, primarily due to the reversal of a contingency at Sul in
2014, lower spot sales at Tiete and the devaluation of the
Brazilian Real, which accounted for 20% of the decline. These
negative drivers were partially offset by the favorable reversal of
a contingent liability in 2015 and a favorable tariff adjustment at
Eletropaulo.
- MCAC: A decrease of $4 million,
primarily driven by lower margins and availability in the Dominican
Republic, as well as lower availability in Mexico. This negative
performance was partially offset by improved hydrological
conditions and the commencement of operations of the power barge in
Panama.
- Europe: A decrease of $62
million, driven by lower spot prices, the timing of planned
maintenance and related costs at Kilroot in the United Kingdom,
lower contributions as a result of the sales of Ebute in Nigeria
and the Company's wind businesses in the United Kingdom,
unfavorable foreign currency exchange rates and the favorable
reversal of a liability at the Company's generation business in
Kazakhstan in 2014.
- Asia: An increase of $11
million, primarily due to the early commencement of operations at
Mong Duong in Vietnam.
- Corp/Other: An improvement of
$75 million, primarily driven by lower Parent interest expense, as
well as realized foreign currency gains associated with the
Company's on-going hedging activities.
Table 3: Proportional Free Cash
Flow1
$ in Millions
Second Quarter Year-to-Date June
30, 2015 2014 Variance 2015
2014 Variance US $ 104 $ 105 $ (1 ) $
259 $ 186 $ 73 Andes (20 ) 17 (37 ) (3 ) 40 (43 )
Brazil (20 ) (2 ) (18 ) (67 ) (64 ) (3 ) MCAC 18 6 12 132 80 52
Europe 35 32 3 174 150 24 Asia 5 7 (2 ) 9 48 (39 ) Corp (60
) (118 ) 58 (177 ) (264 ) 87
Total $ 62
$ 47 $ 15 $
327 $ 176 $
151 1 A non-GAAP financial
measure. See “Non-GAAP Financial Measures” for definitions and
reconciliations to the most comparable GAAP financial measures.
Second quarter 2015 Proportional Free Cash Flow increased $15
million to $62 million, as described above. Key drivers of this
improvement included:
- US: A decrease of $1 million,
primarily driven by lower operating performance and higher working
capital requirements at IPL and a few of the Company's generation
facilities, offset by higher collections and lower interest paid at
DPL.
- Andes: A decrease of $37
million, mainly driven by a higher tax payment at Chivor in
Colombia.
- Brazil: A decrease of $18
million, primarily driven by lower spot sales and a higher
proportion of contracted sales associated with unfavorable
hydrological conditions at Tiete in 2015, partially offset by
higher collections as a result of a higher tariff at
Eletropaulo.
- MCAC: An increase of $12
million, due to lower energy purchases as a result of improved
hydrological conditions in Panama and lower purchased energy costs
in El Salvador.
- Europe: An increase of $3
million, primarily driven by improved working capital at Maritza in
Bulgaria, offset by the timing of planned maintenance at Kilroot in
the United Kingdom and the sale of Ebute in Nigeria in 2014.
- Asia: A decrease of $2 million,
due to lower contributions as a result of the sale of a minority
interest in Masinloc in the Philippines in the second half of
2014.
- Corp/Other: An increase of $58
million, primarily driven by lower Parent interest expense as a
result of the reduction in recourse debt, as well as realized
foreign currency gains associated with the Company's on-going
hedging activities.
Second quarter 2015 Consolidated Net Cash Provided by Operating
Activities decreased $79 million to $153 million, primarily driven
by unfavorable hydrological conditions at Tiete in Brazil and
higher tax payments at Chivor in Colombia, offset by improved
hydrological conditions in Panama, a favorable tariff adjustment at
Eletropaulo in Brazil and favorability at Corporate as a result of
lower Parent interest expense.
For the six months ended June 30, 3015, Proportional Free Cash
Flow increased $151 million to $327 million, primarily due to
higher contributions from the Company's US and MCAC SBUs, including
higher collections at DP&L and improved hydrological conditions
in Panama. Year-to-date 2015 Proportional Free Cash Flow of $327
million represents 28% of the mid-point of full year guidance of
$1,000-$1,350 million. In the first half of 2014, the Company
generated 20% of full year Proportional Free Cash Flow of $891
million. Key drivers of the improvement in 2015 included:
- US: An increase of $73 million,
driven by higher collections and lower interest paid at DPL. These
positive contributions were offset by the impact from lower
generation as a result of lower wind resources at the Company's
wind businesses, higher working capital requirements at Shady Point
in Oklahoma, as well as planned maintenance, lower collections and
higher maintenance capital expenditures at IPL.
- Andes: A decrease of $43
million, mainly driven by a higher tax payment at Chivor in
Colombia.
- Brazil: A decrease of $3
million, primarily driven by lower spot sales and a higher
proportion of contracted sales associated with unfavorable
hydrological conditions at Tiete in 2015, largely offset by higher
collections as a result of a higher tariff at Eletropaulo.
- MCAC: An increase of $52
million, primarily driven by lower energy and fuel costs in El
Salvador and Puerto Rico, as well as lower energy purchases as a
result of improved hydrological conditions in Panama. These
positive contributions were offset by lower collections, higher
spot energy purchases and higher maintenance capital expenditures
in the Dominican Republic.
- Europe: An increase of $24
million, primarily driven by higher collections and improved
working capital at Maritza in Bulgaria, partially offset by the
timing of planned maintenance at Kilroot in the United Kingdom and
the sale of Ebute in Nigeria in 2014.
- Asia: A decrease of $39 million,
primarily related to lower contributions from Masinloc in the
Philippines, as a result of the partial sell-down mentioned above,
as well as the contractual time lag between billing and
collections.
- Corp/Other: An increase of $87
million, primarily driven by lower Parent interest expense as a
result of the reduction in recourse debt, as well as realized
foreign currency gains associated with the Company's on-going
hedging activities.
For the six months ended June 30, 2015, Consolidated Net Cash
Provided by Operating Activities increased $137 million to $590
million, primarily driven by working capital improvements at DPL in
the United States and Panama, El Salvador and Puerto Rico, offset
by the payment of a service concession at Mong Duong in Vietnam and
lower collections in the Dominican Republic.
Table 4: 2015 Guidance
$ in Millions, Except Per Share Amounts
Full Year
2015 Guidance Adjusted EPS1 $1.25-$1.35 Proportional Free Cash
Flow1 $1,000-$1,350 Consolidated Net Cash Provided by Operating
Activities $1,900-$2,700 1 A non-GAAP
financial measure. See “Non-GAAP Financial Measures” for
definitions and reconciliations to the most comparable GAAP
financial measures.
- The Company's 2015 guidance reflects
currency and commodity forward curves as of June 30, 2015.
- The Company is reaffirming its Adjusted
EPS guidance range of $1.25-$1.35.
- The Company's guidance incorporates an
expected impact of $0.07 per share from poor hydrology in Brazil,
consistent with its prior expectations.
- Consistent with the Company's prior
expectations, in the second half of 2015, the Company expects to
benefit from improved availability as a result of planned
maintenance that was completed earlier in the year in Chile, the
Dominican Republic and the US, improved hydrological conditions in
Panama and Colombia, seasonality related to certain regulated and
contracted businesses in the US and at Gener in Chile, as well as
the previously expected benefit from tax opportunities at certain
businesses and the contributions from new plants that came on-line
in the first half of the year.
- The Company is reaffirming its
Proportional Free Cash Flow guidance range of $1,000-$1,350
million.
- The Company expects to generate higher
cash flows in the second half of 2015 as a result of: stronger
second half 2015 Adjusted EPS as described above; and improved
working capital in the US, Andes, MCAC (including higher
collections in the Dominican Republic) and Europe (including
collection of outstanding receivables at Maritza in Bulgaria).
- The Company is reaffirming its
Consolidated Net Cash Provided by Operating Activities guidance
range of $1,900-$2,700 million.
Highlights
- In April, the Company achieved
commercial operations of its 1,240 MW coal-fired Mong Duong 2 power
plant in Vietnam six months early and under budget. Mong Duong 2
has a 25-year Power Purchase Agreement (PPA) with a state-owned
utility.
- The Company currently has 5,839 MW
under construction and on track to come on-line through 2018. These
projects represent $7 billion in total capital expenditures, with
the majority of AES' $1.3 billion in equity already funded.
- In July, the Company broke ground on
three new energy storage projects for a total of 40 MW expected to
come on-line by the end of 2016: the 20 MW Harding Street facility
located at Indianapolis Power and Light in Indiana; the 10 MW
Northern Ireland facility located at Kilroot; and the 10 MW
Netherlands facility.
- Year-to-Date, the Company has
repurchased 26 million shares for $335 million.
- Since its first quarter 2015 earnings
call in May 2015, the Company has repurchased 22 million shares for
$293 million. This includes the repurchase of 20 million shares
from China Investment Corporation in May 2015.
- The Company expects to utilize the
approximately $88 million left on its current share repurchase
authorization before year-end
- Since September 2011, the Company has
repurchased 103 million shares, or 14% of its shares outstanding,
for $1.3 billion.
- In July, the Company signed a
Memorandum of Understanding with Grupo BAL to form a 50/50 joint
venture that will co-invest in power and related infrastructure
projects in Mexico.
- Grupo BAL is a Mexican business
conglomerate with a market cap of $11 billion and companies in
different sectors, such as industrial, commercial, agricultural and
financial services. Some companies in the Group are: Indiustrias
Penoles, Fresnillo FLC, Grupo Nacional Provincial, Palacio de
Hierro, Profuturo GNP, Valmex and the newly created PetroBal.
- In July, the Company signed an
agreement to sell its 50% interest in 31 MW of operating solar in
Spain for $32 million.
Non-GAAP Financial Measures
See Non-GAAP Financial Measures for definitions of Adjusted
Earnings Per Share, Adjusted Pre-Tax Contribution, Proportional
Free Cash Flow, as well as reconciliations to the most comparable
GAAP financial measures.
Attachments
Consolidated Statements of Operations, Consolidated Balance
Sheets, Segment Information, Consolidated Statements of Cash Flows,
Non-GAAP Financial Measures, Parent Financial Information and 2015
Financial Guidance Elements.
Conference Call Information
AES will host a conference call on Monday, August 10, 2015 at
9:00 a.m. Eastern Daylight Time (EDT). Interested parties may
listen to the teleconference by dialing 1-877-201-0168 at least ten
minutes before the start of the call. International callers should
dial +1-647-788-4901. The Conference ID for this call is 74217721.
Internet access to the presentation materials will be available on
the AES website at www.aes.com by selecting “Investors”
and then “Presentations and Webcasts.”
A webcast replay, as well as a replay in downloadable MP3
format, will be accessible at www.aes.com beginning
shortly after the completion of the call.
About AES
The AES Corporation (NYSE:AES) is a Fortune 200 global power
company. We provide affordable, sustainable energy to 18 countries
through our diverse portfolio of distribution businesses as well as
thermal and renewable generation facilities. Our workforce of
18,500 people is committed to operational excellence and meeting
the world’s changing power needs. Our 2014 revenues were $17
billion and we own and manage $39 billion in total assets. To
learn more, please visit www.aes.com. Follow AES on Twitter
@TheAESCorp.
Safe Harbor Disclosure
This news release contains forward-looking statements within the
meaning of the Securities Act of 1933 and of the Securities
Exchange Act of 1934. Such forward-looking statements include, but
are not limited to, those related to future earnings, growth and
financial and operating performance. Forward-looking statements are
not intended to be a guarantee of future results, but instead
constitute AES’ current expectations based on reasonable
assumptions. Forecasted financial information is based on certain
material assumptions. These assumptions include, but are not
limited to, our accurate projections of future interest rates,
commodity price and foreign currency pricing, continued normal
levels of operating performance and electricity volume at our
distribution companies and operational performance at our
generation businesses consistent with historical levels, as well as
achievements of planned productivity improvements and incremental
growth investments at normalized investment levels and rates of
return consistent with prior experience.
Actual results could differ materially from those projected in
our forward-looking statements due to risks, uncertainties and
other factors. Important factors that could affect actual results
are discussed in AES’ filings with the Securities and Exchange
Commission (the “SEC”), including, but not limited to, the risks
discussed under Item 1A “Risk Factors” and Item 7:
Management’s Discussion & Analysis in AES’ 2014 Annual
Report on Form 10-K and in subsequent reports filed with the SEC.
Readers are encouraged to read AES’ filings to learn more about the
risk factors associated with AES’ business. AES undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Any Stockholder who desires a copy of the Company’s 2014 Annual
Report on Form 10-K dated on or about February 25, 2015 with
the SEC may obtain a copy (excluding Exhibits) without charge by
addressing a request to the Office of the Corporate Secretary, The
AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia 22203.
Exhibits also may be requested, but a charge equal to the
reproduction cost thereof will be made. A copy of the Form 10-K may
be obtained by visiting the Company’s website
at www.aes.com.
THE AES CORPORATION
Condensed Consolidated Statements of
Operations (Unaudited)
Three Months Ended June 30, Six Months
Ended June 30, 2015 2014
2015 2014 (in millions, except per share
amounts) Revenue: Regulated $ 2,008 $ 2,116 $ 4,088 $ 4,258
Non-Regulated 1,850 2,195 3,754 4,315
Total revenue 3,858 4,311 7,842 8,573
Cost of Sales: Regulated (1,634 ) (1,844 ) (3,441 ) (3,776 )
Non-Regulated (1,470 ) (1,648 ) (2,926 ) (3,184 ) Total cost of
sales (3,104 ) (3,492 ) (6,367 ) (6,960 ) Operating margin 754
819 1,475 1,613 General and
administrative expenses (50 ) (52 ) (105 ) (103 ) Interest expense
(310 ) (323 ) (673 ) (696 ) Interest income 133 73 223 136 Loss on
extinguishment of debt (122 ) (15 ) (145 ) (149 ) Other expense (14
) (17 ) (34 ) (25 ) Other income 15 33 31 45 Goodwill impairment
expense — — — (154 ) Asset impairment expense (37 ) (63 ) (45 ) (75
) Foreign currency transaction gains (losses) 15 7 (8 ) (12 ) Other
non-operating expense — (44 ) — (44 )
INCOME FROM CONTINUING OPERATIONS BEFORE
TAXES AND EQUITY INEARNINGS OF AFFILIATES
384 418 719 536 Income tax expense (120 ) (157 ) (216 ) (211 ) Net
equity in earnings of affiliates — 20 15 45
INCOME FROM CONTINUING OPERATIONS 264 281 518 370 Income
from operations of discontinued businesses, net of income tax
expense of $0, $8, $0 and $22, respectively — 7 — 27
Net loss from disposal and impairments of
discontinued businesses, net ofincome tax expense (benefit) of $0,
$5, $0 and $4, respectively
— (13 ) — (56 ) NET INCOME 264 275 518 341
Noncontrolling interests: Less: (Income) from continuing operations
attributable to noncontrolling interests (195 ) (139 ) (307 ) (275
) Less: (Income) loss from discontinued operations attributable to
noncontrolling interests — (3 ) — 9 Total net
income attributable to noncontrolling interests (195 ) (142 ) (307
) (266 ) NET INCOME ATTRIBUTABLE TO THE AES CORPORATION $ 69
$ 133 $ 211 $ 75 AMOUNTS ATTRIBUTABLE TO THE
AES CORPORATION COMMON STOCKHOLDERS: Income from continuing
operations, net of tax $ 69 $ 142 $ 211 $ 95 Loss from discontinued
operations, net of tax — (9 ) — (20 ) Net income $ 69
$ 133 $ 211 $ 75 BASIC EARNINGS PER
SHARE:
Income from continuing operations
attributable to The AES Corporation commonstockholders, net of
tax
$ 0.10 $ 0.20 $ 0.30 $ 0.13
Loss from discontinued operations
attributable to The AES Corporation commonstockholders, net of
tax
— (0.02 ) — (0.03 )
NET INCOME ATTRIBUTABLE TO THE AES
CORPORATION COMMONSTOCKHOLDERS
$ 0.10 $ 0.18 $ 0.30 $ 0.10 DILUTED
EARNINGS PER SHARE: Income from continuing operations attributable
to The AES Corporation common stockholders, net of tax $ 0.10 $
0.20 $ 0.30 $ 0.13 Loss from discontinued operations attributable
to The AES Corporation common stockholders, net of tax —
(0.02 ) — (0.03 ) NET INCOME ATTRIBUTABLE TO THE AES
CORPORATION COMMON STOCKHOLDERS $ 0.10 $ 0.18 $ 0.30
$ 0.10 DILUTED SHARES OUTSTANDING 695 728
701 728 DIVIDENDS DECLARED PER COMMON SHARE $
0.10 $ 0.05 $ 0.10 $ 0.05
THE AES CORPORATION Strategic Business Unit (SBU)
Information (Unaudited)
Three Months Ended June 30,
Six Months EndedJune 30, 2015 2014
2015 2014 (in millions)
REVENUE US $ 831 $ 893 $ 1,828 $ 1,894 Andes 630 724 1,242
1,344 Brazil 1,315 1,533 2,645 2,978 MCAC 601 692 1,199 1,330
Europe 299 305 629 696 Asia 187 163 306 331 Corporate, Other and
Inter-SBU eliminations (5 ) 1 (7 ) 0
Total Revenue $ 3,858 $ 4,311
$ 7,842 $ 8,573
THE AES CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, 2015 December 31, 2014
(in millions, except share
and per share data)
ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,022 $
1,539 Restricted cash 308 283 Short-term investments 439 709
Accounts receivable, net of allowance for doubtful accounts of $94
and $96, respectively 2,877 2,709 Inventory 734 702 Deferred income
taxes 213 275 Prepaid expenses 115 175 Other current assets 1,799
1,434 Current assets of held-for-sale businesses 8 —
Total current assets 7,515 7,826 NONCURRENT ASSETS
Property, Plant and Equipment: Land 801 870 Electric generation,
distribution assets and other 30,136 30,459 Accumulated
depreciation (9,996 ) (9,962 ) Construction in progress 2,499
3,784 Property, plant and equipment, net 23,440
25,151 Other Assets: Investments in and advances to
affiliates 562 537 Debt service reserves and other deposits 403 411
Goodwill 1,473 1,458 Other intangible assets, net of accumulated
amortization of $130 and $158, respectively 241 281 Deferred income
taxes 571 662 Service concession assets 1,538 — Other noncurrent
assets 2,691 2,640 Noncurrent assets of held-for-sale businesses
150 — Total other assets 7,629 5,989
TOTAL ASSETS $ 38,584 $ 38,966
LIABILITIES AND
EQUITY CURRENT LIABILITIES Accounts payable $ 1,994 $ 2,278
Accrued interest 244 260 Accrued and other liabilities 2,317 2,326
Non-recourse debt, including $220 and $240, respectively, related
to variable interest entities 1,999 1,982 Recourse debt — 151
Current liabilities of held-for-sale businesses 9 —
Total current liabilities 6,563 6,997 NONCURRENT
LIABILITIES Non-recourse debt, including $1,058 and $1,030,
respectively, related to variable interest entities 13,750 13,618
Recourse debt 5,014 5,107 Deferred income taxes 1,281 1,277 Pension
and other post-retirement liabilities 1,183 1,342 Other noncurrent
liabilities 3,110 3,222 Noncurrent liabilities of held-for-sale
businesses 61 — Total noncurrent liabilities 24,399
24,566 Contingencies and Commitments (see Note 9)
Redeemable stock of subsidiaries 538 78 EQUITY THE AES CORPORATION
STOCKHOLDERS’ EQUITY
Common stock ($0.01 par value,
1,200,000,000 shares authorized; 815,558,389 issued and682,607,128
outstanding at June 30, 2015 and 814,539,146 issued and 703,851,297
outstandingat December 31, 2014)
8 8 Additional paid-in capital 8,705 8,409 Retained earnings 258
512 Accumulated other comprehensive loss (3,445 ) (3,286 )
Treasury stock, at cost (132,951,261
shares at June 30, 2015 and 110,687,849 shares atDecember 31,
2014)
(1,662 ) (1,371 ) Total AES Corporation stockholders’ equity 3,864
4,272 NONCONTROLLING INTERESTS 3,220 3,053 Total
equity 7,084 7,325 TOTAL LIABILITIES AND EQUITY $
38,584 $ 38,966
THE AES CORPORATION
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
Three Months Ended June 30, Six Months Ended
June 30, 2015 2014 2015
2014 (in millions) OPERATING ACTIVITIES: Net income $
264 $ 275 $ 518 $ 341 Adjustments to net income: Depreciation and
amortization 299 319 597 625 Impairment expenses 37 107 45 273
Deferred income taxes 29 (4 ) 17 52 Releases of contingencies (148
) (60 ) (134 ) (48 ) Loss on the extinguishment of debt 122 15 145
149 Loss on sale of assets 2 5 12 8 Loss on disposals and
impairments — discontinued operations — 7 — 51 Other 16 9 70 45
Changes in operating assets and liabilities (Increase) decrease in
accounts receivable (107 ) (93 ) (444 ) (312 ) (Increase) decrease
in inventory (19 ) (27 ) (54 ) (39 ) (Increase) decrease in prepaid
expenses and other current assets 64 2 132 (72 ) (Increase)
decrease in other assets (525 ) 128 (815 ) (316 ) Increase
(decrease) in accounts payable and other current liabilities (94 )
(609 ) 179 (194 ) Increase (decrease) in income tax payables, net
and other tax payables (116 ) 30 (131 ) (176 ) Increase (decrease)
in other liabilities 329 128 453 66 Net
cash provided by operating activities 153 232 590
453 INVESTING ACTIVITIES: Capital Expenditures (549 )
(509 ) (1,168 ) (908 ) Acquisitions, net of cash acquired (1 ) (728
) (18 ) (728 ) Proceeds from the sale of businesses, net of cash
sold 2 861 2 890 Proceeds from the sale of assets 1 16 1 16 Sale of
short-term investments 1,384 1,149 2,460 2,198 Purchase of
short-term investments (1,216 ) (932 ) (2,270 ) (1,925 ) (Increase)
decrease in restricted cash, debt service reserves and other assets
24 146 (51 ) 127 Other investing 5 (68 ) (26 )
(61 ) Net cash used in investing activities (350 ) (65 )
(1,070 ) (391 ) FINANCING ACTIVITIES: Borrowings under the
revolving credit facilities 260 520 361 737 Issuance of recourse
debt 575 775 575 1,525 Issuance of non-recourse debt 1,366 1,156
1,940 1,710 Repayments under the revolving credit facilities (297 )
(455 ) (359 ) (607 ) Repayments of recourse debt (579 ) (797 ) (915
) (1,663 ) Repayments of non-recourse debt (1,188 ) (1,000 ) (1,457
) (1,349 ) Payments for financing fees (31 ) (27 ) (40 ) (105 )
Distributions to noncontrolling interests (94 ) (171 ) (113 ) (197
) Contributions from noncontrolling interests 30 78 97 110 Proceeds
from the sale of redeemable stock of subsidiaries 214 — 461 —
Dividends paid on AES common stock (71 ) (36 ) (141 ) (72 )
Payments for financed capital expenditures (42 ) (134 ) (84 ) (312
) Purchase of treasury stock (272 ) (32 ) (307 ) (32 ) Other
financing 5 5 (29 ) 5 Net cash used in
financing activities (124 ) (118 ) (11 ) (250 ) Effect of exchange
rate changes on cash 8 8 (19 ) (14 ) (Decrease) increase in cash of
discontinued and held-for-sale businesses (2 ) 45 (7
) 75 Total decrease in cash and cash equivalents (315 ) 102
(517 ) (127 ) Cash and cash equivalents, beginning 1,337
1,413 1,539 1,642 Cash and cash
equivalents, ending $ 1,022 $ 1,515 $ 1,022
$ 1,515 SUPPLEMENTAL DISCLOSURES: Cash payments for
interest, net of amounts capitalized $ 423 $ 450 $ 665 $ 676 Cash
payments for income taxes, net of refunds $ 144 $ 95 $ 247 $ 332
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Assets
received upon sale of subsidiaries $ — $ 44 $ — $ 44 Assets
acquired through capital lease $ 5 $ 2 $ 10 $ 13
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
RECONCILIATION OF ADJUSTED PRE-TAX
CONTRIBUTION (PTC) AND ADJUSTED EPS
Adjusted pre-tax contribution (“adjusted PTC”) and Adjusted
earnings per share (“adjusted EPS”) are non-GAAP supplemental
measures that are used by management and external users of our
consolidated financial statements such as investors, industry
analysts and lenders.
We define adjusted PTC as pre-tax income from continuing
operations attributable to AES excluding gains or losses of the
consolidated entity due to (a) unrealized gains or losses
related to derivative transactions, (b) unrealized foreign
currency gains or losses, (c) gains or losses due to
dispositions and acquisitions of business interests,
(d) losses due to impairments, and (e) costs due to the
early retirement of debt. Adjusted PTC also includes net equity in
earnings of affiliates on an after-tax basis adjusted for the same
gains or losses excluded from consolidated entities.
We define adjusted EPS as diluted earnings per share from
continuing operations excluding gains or losses of both
consolidated entities and entities accounted for under the equity
method due to (a) unrealized gains or losses related to
derivative transactions, (b) unrealized foreign currency gains
or losses, (c) gains or losses due to dispositions and
acquisitions of business interests, (d) losses due to
impairments, and (e) costs due to the early retirement of
debt.
The GAAP measure most comparable to adjusted PTC is income from
continuing operations attributable to AES. The GAAP measure most
comparable to adjusted EPS is diluted earnings per share from
continuing operations. We believe that adjusted PTC and adjusted
EPS better reflect the underlying business performance of the
Company and are considered in the Company’s internal evaluation of
financial performance. Factors in this determination include
the variability due to unrealized gains or losses related to
derivative transactions, unrealized foreign currency gains or
losses, losses due to impairments and strategic decisions to
dispose of or acquire business interests or retire debt, which
affect results in a given period or periods. In addition, for
adjusted PTC, earnings before tax represents the business
performance of the Company before the application of statutory
income tax rates and tax adjustments, including the effects of tax
planning, corresponding to the various jurisdictions in which the
Company operates. Adjusted PTC and adjusted EPS should not be
construed as alternatives to income from continuing operations
attributable to AES and diluted earnings per share from continuing
operations, which are determined in accordance with GAAP.
Three MonthsEnded June
30,2015
Three MonthsEnded June
30,2014
Six MonthsEnded June
30,2015
Six MonthsEnded June
30,2014
Net ofNCI(1)
Per Share(Diluted)Net ofNCI(1) andTax
Net ofNCI(1)
PerShare(Diluted)Net of NCI(1)and Tax
Net ofNCI(1)
Per Share(Diluted)Net ofNCI(1)and Tax
Net ofNCI(1)
Per Share(Diluted)Net ofNCI(1)and Tax
(In millions, except per share amounts)
Income (loss) from
continuingoperations attributable to AES andDiluted
EPS
$ 69 $ 0.10 $ 142
$ 0.20 $ 211 $ 0.30
$ 95 $ 0.13
Add back income tax expense (benefit)from
continuing operations attributable to AES
46 99 96 74 Pre-tax contribution
$ 115 $ 241 $ 307
$ 169 Adjustments Unrealized derivative
(gains)/ losses(2) $ (2 ) $ — $ (22 ) $ (0.02 ) $ (17 ) $ (0.02 ) $
(32 ) $ (0.03 )
Unrealized foreign currency
transaction(gains)/ losses(3)
(3 ) — 7 — 44 0.04 33 0.03 Disposition/ acquisition (gains)/ losses
(4 ) (0.01 ) 2 — (9 ) (0.01 ) 1 — Impairment losses 30 0.04 (4) 99
0.09 (5) 36 0.05 (4) 265 0.26 (6) Loss on extinguishment of debt
115 0.12 (7) 13 0.01 (8) 142
0.14 (9) 147 0.14 (10)
Adjusted PTC and
Adjusted EPS $ 251 $ 0.25
$ 340 $ 0.28
$ 503 $ 0.50 $
583 $ 0.53
_____________________________
(1) NCI is defined as Noncontrolling Interests. (2)
Unrealized derivative (gains) losses were net of income tax per
share of $0.00 and $(0.01) in the three months ended June 30, 2015
and 2014, and of $(0.01) and $(0.01) in the six months ended June
30, 2015 and 2014, respectively. (3) Unrealized foreign currency
transaction (gains) losses were net of income tax per share of
$(0.01) and $0.00 in the three months ended June 30, 2015 and 2014,
and of $0.02 and $0.01 in the six months ended June 30, 2015 and
2014, respectively. (4) Amount primarily relates to the asset
impairment at UK Wind of $37 million ($30 million, or $0.04 per
share, net of income tax per share of $0.00). (5) Amount primarily
relates to the asset impairment at Ebute of $52 million ($34
million, or $0.05 per share, net of income tax per share of $0.02)
and at Newfield of $11 million ($6 million, or $0.00 per share, net
of income tax per share of $0.00) and other-than-temporary
impairment of our equity method investment at Silver Ridge of $44
million ($30 million, or $0.04 per share, net of income tax per
share of $0.02). (6) Amount primarily relates to the goodwill
impairments at DPLER of $136 million ($92 million, or $0.13 per
share, net of income tax per share of $0.06), at Buffalo Gap of $18
million ($18 million, or $0.03 per share, net of income tax per
share of $0.00) and asset impairments at Ebute of $52 million ($34
million, or $0.05 per share, net of income tax per share of $0.02),
at Newfield of $11 million ($6 million, or $0.00 per share, net of
income tax per share of $0.00), at DPL of $12 million ($8 million,
or $0.01 per share, net of income tax per share of $0.00) and
other-than-temporary impairment of our equity method investment at
Silver Ridge of $44 million ($30 million, or $0.04 per share, net
of income tax per share of $0.02). (7) Amount primarily relates to
the loss on early retirement of debt at the Parent Company of $85
million ($58 million, or $0.08 per share, net of income tax per
share of $0.04), at IPL of $19 million ($10 million, or $0.01 per
share, net of income tax per share of $0.01), at Panama of $16
million ($5 million, or $0.01 per share, net of income tax per
share of $0.00) and at Sul of $4 million ($3 million, or $0.00 per
share, net of income tax per share of $0.00). (8) Amount primarily
relates to the loss on early retirement of debt at the Parent
Company of $13 million ($8 million, or $0.01 per share, net of
income tax per share of $0.01). (9) Amount primarily relates to the
loss on early retirement of debt at the Parent Company of $111
million ($76 million, or $0.11 per share, net of income tax per
share of $0.05), at IPL of $19 million ($10 million, or $0.01 per
share, net of income tax per share of $0.01), at Panama of $16
million ($5 million, or $0.01 per share, net of income tax per
share of $0.00) and at Sul of $4 million ($3 million, or $0.00 per
share, net of income tax per share of $0.00). (10) Amount primarily
relates to the loss on early retirement of debt at the Parent
Company of $145 million ($99 million, or $0.14 per share, net of
income tax per share of $0.06).
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended Six Months Ended June
30, June 30, 2015 2014
2015 2014 (in millions)
Calculation of Maintenance Capital
Expenditures for Free Cash Flow (1)Reconciliation
Below:
Maintenance Capital Expenditures $ 157 $ 152 $ 306 $
289 Environmental Capital Expenditures 81 77 130 111 Growth Capital
Expenditures 353 414 816 820
Total
Capital Expenditures $ 591 $
643 $ 1,252 $
1,220
Reconciliation of Proportional Operating Cash
Flow(2) Consolidated Operating Cash Flow $ 153 $ 232 $
590 $ 453 Add: capital expenditures related to service concession
assets (4) 51 0 71 0 Less: Proportional Adjustment Factor (3) (6)
(13 ) (64 ) (85 ) (44 )
Proportional
Operating Cash Flow (2) $ 191
$ 168 $ 576 $
409
Reconciliation of Free Cash Flow(1)
Consolidated Operating Cash Flow $ 153 $ 232 $ 590 $ 453 Add:
capital expenditures related to service concession assets (4) 51 0
71 0 Less: Maintenance Capital Expenditures, net of reinsurance
proceeds (157 ) (152 ) (306 ) (289 ) Less: Non-Recoverable
Environmental Capital Expenditures (17 ) (25 ) (26 )
(36 )
Free Cash Flow(1) $ 30
$ 55 $ 329
$ 128
Reconciliation of
Proportional Free Cash Flow(1),(2) Proportional
Operating Cash Flow $ 191 $ 168 $ 576 $ 409 Less: Proportional
Maintenance Capital Expenditures, net of reinsurance proceeds (3)
(117) (102) (230) (206 ) Less: Proportional Non-Recoverable
Environmental Capital Expenditures (3) (5) (12) (19) (19) (27 )
Proportional Free Cash Flow(1),(2) $ 62
$ 47 $ 327
$ 176 (1) Free cash flow
(a non-GAAP financial measure) is defined as net cash from
operating activities less maintenance capital expenditures
(including non-recoverable environmental capital expenditures), net
of reinsurance proceeds from third parties. AES believes that free
cash flow is a useful measure for evaluating our financial
condition because it represents the amount of cash provided by
operations less maintenance capital expenditures as defined by our
businesses, that may be available for investing or for repaying
debt. (2) AES is a holding company that derives its income and cash
flows from the activities of its subsidiaries, some of which may
not be wholly-owned by the Company. Accordingly, the Company has
presented certain financial metrics which are defined as
Proportional (a non-GAAP financial measure). Proportional metrics
present the Company's estimate of its share in the economics of the
underlying metric. The Company believes that the Proportional
metrics are useful to investors because they exclude the economic
share in the metric presented that is held by non-AES shareholders.
For example, Net Cash from Operating Activities (Operating Cash
Flow) is a GAAP metric which presents the Company's cash flow from
operations on a consolidated basis, including operating cash flow
allocable to noncontrolling interests. Proportional Operating Cash
Flow removes the share of operating cash flow allocable to
noncontrolling interests and therefore may act as an aid in the
v-aluation of the Company. Beginning in Q1 2015, the definition was
revised to also exclude cash flows related to service concession
assets. Proportional metrics are reconciled to the nearest GAAP
measure. Certain assumptions have been made to estimate our
proportional financial measures. These assumptions include: (i) the
Company's economic interest has been calculated based on a blended
rate for each consolidated business when such business represents
multiple legal entities; (ii) the Company's economic interest may
differ from the percentage implied by the recorded net income or
loss attributable to noncontrolling interests or dividends paid
during a given period; (iii) the Company's economic interest for
entities accounted for using the hypothetical liquidation at book
value method is 100%; (iv) individual operating performance of the
Company's equity method investments is not reflected and (v)
inter-segment transactions are included as applicable for the
metric presented. (3) The proportional adjustment factor,
proportional maintenance capital expenditures (net of reinsurance
proceeds), and proportional non-recoverable environmental capital
expenditures are calculated by multiplying the percentage owned by
non-controlling interests for each entity by its corresponding
consolidated cash flow metric and adding up the resulting figures.
For example, the Company owns approximately 71% of AES Gener, its
subsidiary in Chile. Assuming a consolidated net cash flow from
operating activities of $100 from AES Gener, the proportional
adjustment factor for AES Gener would equal approximately $29 (or
$100 x 29%). The Company calculates the proportional adjustment
factor for each consolidated business in this manner and then adds
these amounts together to determine the total proportional
adjustment factor used in the reconciliation. The proportional
adjustment factor may differ from the proportion of income
attributable to noncontrolling interests as a result of (a)
non-cash items which impact income but not cash and (b) AES’
ownership interest in the subsidiary where such items occur. (4)
Service concession asset expenditures excluded from free cash flow
and proportional free cash flow non-GAAP metric. (5) Excludes
IPALCO’s proportional recoverable environmental capital
expenditures of $47 million and $52 million for the three months
ended June 30, 2015 and June 30, 2014, as well as, $86 million and
$74 million for the six months ended June 30, 2015 and June 30,
2014, respectively. (6) Includes proportional adjustment amount for
service concession asset expenditures of $26 million and $36
million for the three and six months ended June 30, 2015. The
Company adopted service concession accounting effective January 1,
2015.
The AES Corporation Parent Financial
Information
Parent only data: last four quarters
(in millions)
Quarters Ended
Total subsidiary distributions & returns of capital to
Parent
June 30,2015
March 31,2015
December 31,2014
September 30,2014
Actual Actual Actual
Actual Subsidiary distributions(1) to Parent &
QHCs $ 1,119 $ 1,094 $ 1,151 $ 1,139 Returns of capital
distributions to Parent & QHCs 57 75
85 96
Total subsidiary distributions &
returns of capital to Parent $ 1,176
$ 1,169 $ 1,236
$ 1,235 Parent only data:
quarterly ($ in millions)
Quarter Ended Total
subsidiary distributions & returns of capital to
Parent
June 30,2015
March 31,2015
December 31,2014
September 30,2014
Actual Actual Actual
Actual Subsidiary distributions to Parent & QHCs
$ 235 $ 175 $ 414 $ 295
Returns of capital distributions to Parent
& QHCs
8
0
18
31
Total subsidiary distributions & returns of capital to
Parent $ 243 $ 175
$ 432 $ 326
Parent Company Liquidity (2) ($ in
millions)
Balance at
June 30,2015
March 31,2015
December 31,2014
September 30,2014
Actual Actual Actual
Actual Cash at Parent & Cash at QHCs (3) $ 40 $ 292 $
507 $ 229
Availability under credit facilities
739
739
739
799
Ending liquidity $ 779 $
1,031 $ 1246
$ 1028 (1) Subsidiary
distributions should not be construed as an alternative to Net Cash
Provided by Operating Activities which are determined in accordance
with GAAP. Subsidiary distributions are important to the Parent
Company because the Parent Company is a holding company that does
not derive any significant direct revenues from its own activities
but instead relies on its subsidiaries’ business activities and the
resultant distributions to fund the debt service, investment and
other cash needs of the holding company. The reconciliation of the
difference between the subsidiary distributions and the Net Cash
Provided by Operating Activities consists of cash generated from
operating activities that is retained at the subsidiaries for a
variety of reasons which are both discretionary and
non-discretionary in nature. These factors include, but are not
limited to, retention of cash to fund capital expenditures at the
subsidiary, cash retention associated with non-recourse debt
covenant restrictions and related debt service requirements at the
subsidiaries, retention of cash related to sufficiency of local
GAAP statutory retained earnings at the subsidiaries, retention of
cash for working capital needs at the subsidiaries, and other
similar timing differences between when the cash is generated at
the subsidiaries and when it reaches the Parent Company and related
holding companies. (2) Parent Company Liquidity is defined as cash
at the Parent Company plus availability under corporate credit
facilities plus cash at qualified holding companies (QHCs). AES
believes that unconsolidated Parent Company liquidity is important
to the liquidity position of AES as a Parent Company because of the
non-recourse nature of most of AES’s indebtedness. (3) The cash
held at QHCs represents cash sent to subsidiaries of the company
domiciled outside of the US. Such subsidiaries had no contractual
restrictions on their ability to send cash to AES, the Parent
Company. Cash at those subsidiaries was used for investment and
related activities outside of the US. These investments included
equity investments and loans to other foreign subsidiaries as well
as development and general costs and expenses incurred outside the
US. Since the cash held by these QHCs is available to the Parent,
AES uses the combined measure of subsidiary distributions to Parent
and QHCs as a useful measure of cash available to the Parent to
meet its international liquidity needs.
THE AES CORPORATION
2015 FINANCIAL GUIDANCE
ELEMENTS(1), (2)
2015 Financial Guidance As of 5/11/15
Consolidated Proportional Income
Statement Guidance Adjusted Earnings Per Share (3) $1.25-$1.35
Cash Flow Guidance Net Cash Provided by Operating Activities
$1,900-$2,700 million Free Cash Flow (4) $1,000-$1,350 million
Reconciliation of Free Cash Flow Guidance Net Cash from
Operating Activities $1,900-$2,700 million $1,600-$1,950 million
Less: Maintenance Capital Expenditures $650-$950 million $450-$750
million Free Cash Flow (4) $1,100-$1,900 million $1,000-$1,350
million (1) 2015 Guidance is based on
expectations for future foreign exchange rates and commodity prices
as of June 30, 2015. (2) AES is a holding company that derives its
income and cash flows from the activities of its subsidiaries, some
of which may not be wholly-owned by the Company. Accordingly, the
Company has presented certain financial metrics which are defined
as Proportional (a non-GAAP financial measure). Proportional
metrics present the Company's estimate of its share in the
economics of the underlying metric. The Company believes that the
Proportional metrics are useful to investors because they exclude
the economic share in the metric presented that is held by non-AES
shareholders. For example, Net Cash from Operating Activities
(Operating Cash Flow) is a GAAP metric which presents the Company's
cash flow from operations on a consolidated basis, including
operating cash flow allocable to noncontrolling interests.
Proportional Operating Cash Flow removes the share of operating
cash flow allocable to noncontrolling interests and therefore may
act as an aid in the valuation of the Company. Proportional metrics
are reconciled to the nearest GAAP measure. Certain assumptions
have been made to estimate our proportional financial measures.
These assumptions include: (i) the Company's economic interest has
been calculated based on a blended rate for each consolidated
business when such business represents multiple legal entities;
(ii) the Company's economic interest may differ from the percentage
implied by the recorded net income or loss attributable to
noncontrolling interests or dividends paid during a given period;
(iii) the Company's economic interest for entities accounted for
using the hypothetical liquidation at book value method is 100%;
(iv) individual operating performance of the Company's equity
method investments is not reflected and (v) inter-segment
transactions are included as applicable for the metric presented.
(3) Adjusted earnings per share (a non-GAAP financial measure) is
defined as diluted earnings per share from continuing operations
excluding gains or losses of the consolidated entity due to (a)
unrealized gains or losses related to derivative transactions, (b)
unrealized foreign currency gains or losses, (c) gains or losses
due to dispositions and acquisitions of business interests, (d)
losses due to impairments, and (e) costs due to the early
retirement of debt. The GAAP measure most comparable to Adjusted
EPS is diluted earnings per share from continuing operations. AES
believes that adjusted earnings per share better reflects the
underlying business performance of the Company, and is considered
in the Company's internal evaluation of financial performance.
Factors in this determination include the variability due to
unrealized gains or losses related to derivative transactions,
unrealized foreign currency gains or losses, losses due to
impairments and strategic decisions to dispose or acquire business
interests or retire debt, which affect results in a given period or
periods. Adjusted earnings per share should not be construed as an
alternative to diluted earnings per share from continuing
operations, which is determined in accordance with GAAP. (4) Free
Cash Flow is reconciled above. Free cash flow (a non-GAAP financial
measure) is defined as net cash from operating activities less
maintenance capital expenditures (including environmental capital
expenditures), net of reinsurance proceeds from third parties. AES
believes that free cash flow is a useful measure for evaluating our
financial condition because it represents the amount of cash
provided by operations less maintenance capital expenditures as
defined by our businesses, that may be available for investing or
for repaying debt.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150810005499/en/
The AES CorporationInvestors:Ahmed Pasha,
703-682-6451orMedia:Amy Ackerman, 703-682-6399
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