Q3 2018 Strategic Highlights
- On track to attain investment grade
credit metrics in 2019 and ratings in 2020
- Signed long-term contracts for 392 MW
of renewable capacity, bringing year-to-date total to 1.9 GW and
backlog to 5.7 GW
- Agreed to sell approximately 24% of the
Company's interest in sPower's operating portfolio, contributing to
an overall return on sPower of 13%
- Negotiated a 10-year agreement to sell
9 TBTU annually in the Dominican Republic, bringing year-to-date
total new sales to 25 TBTU, which will contribute to growth beyond
2020
- Year-to-date, Fluence energy storage JV
awarded more than 250 MW of new projects
Q3 2018 Financial Highlights
- Diluted EPS of $0.15, compared to $0.22
in Q3 2017; YTD 2018 Diluted EPS of $1.33, compared to $0.27 in YTD
2017
- Adjusted EPS of $0.35, compared to
$0.23 in Q3 2017; YTD 2018 Adjusted EPS of $0.88, compared to $0.65
in YTD 2017
- Reaffirming 2018 guidance and
expectations for 8% to 10% average annual growth in Adjusted EPS
and Parent Free Cash Flow through 2020
The AES Corporation (NYSE: AES) today reported financial results
for the quarter ended September 30, 2018.
"During the third quarter, we continued to successfully execute
on our strategic plan. On the renewables front, we signed 392 MW of
long-term contracts, bringing our year-to-date total to 1.9 GW and
increasing our backlog of projects to 5.7 GW. This includes the
first 270 MW of 'green blend and extend' we recently signed in
Chile, which will allow us to reduce our carbon intensity, while
extending AES Gener's average contract life at attractive returns,"
said Andrés Gluski, AES President and Chief Executive Officer. "We
also agreed to sell 24% of sPower's operating fleet and we will
invest the proceeds in sPower's 10 GW development pipeline,
yielding higher returns. Regarding LNG in Central America and the
Caribbean, we signed a long-term LNG supply agreement for 9 TBTU
per year in the Dominican Republic, nearly fully utilizing the
terminal's capacity. We expect to replicate this success in Panama,
where approximately 60% of the tank's capacity is available for
future growth."
"We are pleased with our third quarter performance, including
our Adjusted EPS, which was 52% higher than in third quarter 2017,
and reflects higher contributions from our South America and US and
Utilities SBUs. Further, our year-to-date results put us on track
to achieve our 2018 guidance and we remain confident that we will
deliver on our longer-term expectations through 2020," said Tom
O'Flynn, AES Executive Vice President and Chief Financial Officer.
"We are continuing on our path to investment grade credit metrics
in 2019 and ratings in 2020."
Key Q3 2018 Financial Results
Third quarter 2018 Diluted Earnings Per Share from Continuing
Operations (Diluted EPS) was $0.15, a decrease of $0.07 compared to
third quarter 2017, primarily reflecting $0.10 impairment expense
at a U.S. generation facility due to the imminent expiration of the
plant's Power Purchase Agreement (PPA), and a $0.05 non-cash charge
to true-up the provisional estimate of U.S. tax reform. These
impacts were partially offset by lower debt extinguishment costs,
lower Parent interest expense and higher margins.
Third quarter 2018 Adjusted Earnings Per Share (Adjusted EPS, a
non-GAAP financial measure) was $0.35, an increase of $0.12
compared to third quarter 2017. This reflects higher margins in the
South America and US and Utilities Strategic Business Units (SBU),
a lower effective quarterly tax rate, and lower Parent interest
expense.
Detailed Strategic Highlights
- On track to achieve $100 million cost
savings program
- Backlog of 5,701 MW includes:
- 3,836 MW under construction and coming
on-line through 2021; and
- 1,865 MW of renewables signed
year-to-date under long-term PPAs, including 392 MW signed since
the Company's Q2 2018 earnings call:
- 270 MW Candelaria project, which allows
the Company to extend an existing thermal PPA in Chile by replacing
the capacity with wind and solar
- 100 MW of solar capacity at sPower with
a utility customer in the U.S.
- In October, the Company agreed to sell
approximately 24% of its interest in sPower's 1.3 GW operating
portfolio to a subsidiary of Ullico Inc., an insurance and
financial services company in the U.S.
- Alberta Investment Management
Corporation (AIMCo) also sold approximately 24% of its interest in
sPower's operating portfolio to Ullico
- Once the sale closes, AES' ownership in
sPower's operating portfolio will decrease from 50% to 38%
- This transaction, combined with steps
the Company has taken, including two previously completed
refinancings and reduced operating costs, increases the Company's
return on sPower's operating portfolio to 13%
- The proceeds from this transaction and
dividends received since the acquisition in 2017, represent more
than half of AES' original investment in sPower
- In October, the Company signed a
10-year agreement for 9 TBTU annually in the Dominican Republic
- The Company owns two LNG regasification
and storage facilities in the Dominican Republic and Panama, with
total annual capacity of 150 TBTU
- Year-to-date the Company has sold 25
TBTU of its excess LNG capacity, to meet growing demand for
efficient natural gas in the region, leaving approximately 60 TBTU
of excess capacity representing potential upside
- In October, DPL was upgraded to
investment grade by both Fitch and Moody's; DPL is now rated
investment grade by all three ratings agencies
- In September, DPL received an order
from the Public Utilities Commission of Ohio, successfully
completing its distribution rate case, and began collecting new
rates on October 1, 2018
- In October, IPL received an order from
the Indiana Utility Regulatory Commission, authorizing new rates to
become effective on December 5, 2018
Guidance and Expectations1
The Company reaffirms its 2018 Adjusted EPS guidance of $1.15 to
$1.25 and its average annual growth rate target of 8% to 10%
through 2020. Growth in 2018 will be primarily driven by
contributions from new businesses, cost savings and lower Parent
interest.
The Company also reaffirms its 2018 Parent Free Cash Flow
expectation of $600 million to $675 million.
The Company's 2018 guidance and expectations through 2020 are
based on foreign currency and commodity forward curves as of
September 30, 2018.
1 Adjusted EPS and Parent Free Cash Flow are non-GAAP
financial measures. See attached "Non-GAAP Measures" for definition
of Adjusted EPS and see below for definition of Parent Free Cash
Flow. The Company is not able to provide a corresponding GAAP
equivalent or reconciliation for its Adjusted EPS guidance without
unreasonable effort. See "Non-GAAP measures" for a description of
the adjustments to reconcile Adjusted EPS to Diluted EPS for the
quarter ended September 30, 2018.
Non-GAAP Financial Measures
See Non-GAAP Measures for definitions of Adjusted Earnings Per
Share and Adjusted Pre-Tax Contributions, as well as
reconciliations to the most comparable GAAP financial measures.
Parent Free Cash Flow should not be construed as an alternative
to Net Cash Provided by Operating Activities which is determined in
accordance with GAAP. Parent Free Cash Flow is equal to Subsidiary
Distributions less cash used for interest costs, development,
general and administrative activities, and tax payments by the
Parent Company. Parent Free Cash Flow is used for dividends, share
repurchases, growth investments, recourse debt repayments, and
other uses by the Parent Company.
Attachments
Condensed Consolidated Statements of Operations, Segment
Information, Condensed Consolidated Balance Sheets, Condensed
Consolidated Statements of Cash Flows, Non-GAAP Measures and Parent
Financial Information.
Conference Call Information
AES will host a conference call on Tuesday, November 6,
2018 at 9:00 a.m. Eastern Standard Time (EST). Interested parties
may listen to the teleconference by dialing 1-888-317-6003 at least
ten minutes before the start of the call. International callers
should dial +1-412-317-6061. The Conference ID for this call is
4095848. Internet access to the conference call and 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 500 global power
company. We provide affordable, sustainable energy to 15 countries
through our diverse portfolio of distribution businesses as well as
thermal and renewable generation facilities. Our workforce is
committed to operational excellence and meeting the world’s
changing power needs. Our 2017 revenues were $11 billion and we own
and manage $33 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’ 2017 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 2017 Annual
Report on Form 10-K dated on or about February 26, 2018 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 EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018 2017
(in millions, except per share amounts) Revenue: Regulated $
777 $ 853 $ 2,215 $ 2,449 Non-Regulated 2,060 1,840
5,899 5,438 Total revenue 2,837 2,693
8,114 7,887 Cost of Sales: Regulated (638 ) (704 )
(1,856 ) (2,088 ) Non-Regulated (1,528 ) (1,349 ) (4,331 ) (3,979 )
Total cost of sales (2,166 ) (2,053 ) (6,187 ) (6,067 ) Operating
margin 671 640 1,927 1,820 General and
administrative expenses (43 ) (52 ) (134 ) (155 ) Interest expense
(255 ) (297 ) (799 ) (860 ) Interest income 79 63 231 185 Loss on
extinguishment of debt (11 ) (49 ) (187 ) (44 ) Other expense (29 )
(36 ) (42 ) (67 ) Other income 10 16 30 103 Gain (loss) on disposal
and sale of businesses (21 ) (1 ) 856 (49 ) Asset impairment
expense (74 ) (2 ) (166 ) (260 ) Foreign currency transaction gains
(losses) 5 22 (44 ) 14 INCOME FROM CONTINUING
OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES 332
304 1,672 687 Income tax expense (146 ) (93 ) (509 ) (246 ) Net
equity in earnings of affiliates 6 24 31 33
INCOME FROM CONTINUING OPERATIONS 192 235 1,194 474 Income
(loss) from operations of discontinued businesses, net of income
tax expense of $0, $17, $2 and $24, respectively (4 ) 26 (9 ) 35
Gain from disposal of discontinued businesses, net of income tax
expense of $2, $0, $44 and $0, respectively 3 — 199
— NET INCOME 191 261 1,384 509 Noncontrolling
interests: Less: Income from continuing operations attributable to
noncontrolling interests and redeemable stocks of subsidiaries (90
) (88 ) (311 ) (298 ) Less: Loss (income) from discontinued
operations attributable to noncontrolling interests — (21 )
2 (30 ) NET INCOME ATTRIBUTABLE TO THE AES CORPORATION $ 101
$ 152 $ 1,075 $ 181 AMOUNTS
ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: Income
from continuing operations, net of tax $ 102 $ 147 $ 883 $ 176
Income (loss) from discontinued operations, net of tax (1 ) 5
192 5 NET INCOME ATTRIBUTABLE TO THE AES
CORPORATION $ 101 $ 152 $ 1,075 $ 181
BASIC EARNINGS PER SHARE: Income from continuing operations
attributable to The AES Corporation common stockholders, net of tax
$ 0.15 $ 0.22 $ 1.33 $ 0.27 Income from discontinued operations
attributable to The AES Corporation common stockholders, net of tax
— 0.01 0.29 0.01 NET INCOME
ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS $ 0.15
$ 0.23 $ 1.62 $ 0.28 DILUTED EARNINGS
PER SHARE: Income from continuing operations attributable to The
AES Corporation common stockholders, net of tax $ 0.15 $ 0.22 $
1.33 $ 0.27 Income from discontinued operations attributable to The
AES Corporation common stockholders, net of tax — 0.01
0.29 0.01 NET INCOME ATTRIBUTABLE TO THE AES
CORPORATION COMMON STOCKHOLDERS $ 0.15 $ 0.23 $ 1.62
$ 0.28 DILUTED SHARES OUTSTANDING 665 663
664 662 DIVIDENDS DECLARED PER COMMON SHARE $
0.13 $ 0.12 $ 0.26 $ 0.24
THE AES CORPORATION Strategic Business Unit (SBU)
Information (Unaudited)
Three Months Ended September
30,
Nine Months Ended September 30, (in millions)
2018 2017 2018 2017
REVENUE US and Utilities SBU $ 1,230 $ 1,086 $ 3,252 $ 3,179
South America SBU 923 834 2,664 2,377 MCAC SBU 462 397 1,276 1,120
Eurasia SBU 224 380 935 1,204 Corporate, Other and Inter-SBU
eliminations (2 ) (4 ) (13 ) 7 Total
Revenue $ 2,837 $ 2,693 $ 8,114 $ 7,887
THE AES CORPORATION Condensed Consolidated Balance
Sheets (Unaudited)
September 30, 2018
December 31, 2017
(in millions, except shareand
per share data)
ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,187 $
949 Restricted cash 441 274 Short-term investments 401 424 Accounts
receivable, net of allowance for doubtful accounts of $16 and $10,
respectively 1,510 1,463 Inventory 562 562 Prepaid expenses 97 62
Other current assets 706 630 Current held-for-sale assets 111
2,034 Total current assets 5,015 6,398
NONCURRENT ASSETS Property, Plant and Equipment: Land 470 502
Electric generation, distribution assets and other 25,055 24,119
Accumulated depreciation (8,033 ) (7,942 ) Construction in progress
3,616 3,617 Property, plant and equipment, net 21,108
20,296 Other Assets: Investments in and advances to
affiliates 1,277 1,197 Debt service reserves and other deposits 494
565 Goodwill 1,059 1,059 Other intangible assets, net of
accumulated amortization of $472 and $441, respectively 400 366
Deferred income taxes 88 130 Service concession assets, net of
accumulated amortization of $0 and $206, respectively — 1,360 Loan
receivable 1,441 — Other noncurrent assets 1,607 1,741
Total other assets 6,366 6,418 TOTAL ASSETS $
32,489 $ 33,112
LIABILITIES AND EQUITY CURRENT
LIABILITIES Accounts payable $ 1,299 $ 1,371 Accrued interest 272
228 Accrued and other liabilities 1,151 1,232 Non-recourse debt,
includes $368 and $1,012, respectively, related to variable
interest entities 1,308 2,164 Current held-for-sale liabilities 17
1,033 Total current liabilities 4,047 6,028
NONCURRENT LIABILITIES Recourse debt 3,815 4,625
Non-recourse debt, includes $2,832 and $1,358, respectively,
related to variable interest entities 14,273 13,176 Deferred income
taxes 1,214 1,006 Other noncurrent liabilities 2,552 2,595
Total noncurrent liabilities 21,854 21,402
Commitments and Contingencies (see Note 8) Redeemable stock of
subsidiaries 879 837 EQUITY THE AES CORPORATION STOCKHOLDERS’
EQUITY Common stock ($0.01 par value, 1,200,000,000 shares
authorized; 817,203,691 issued and 662,297,479 outstanding at
September 30, 2018 and 816,312,913 issued and 660,388,128
outstanding at December 31, 2017) 8 8 Additional paid-in capital
8,328 8,501 Accumulated deficit (1,133 ) (2,276 ) Accumulated other
comprehensive loss (2,020 ) (1,876 ) Treasury stock, at cost
(154,906,212 and 155,924,785 shares at September 30, 2018 and
December 31, 2017, respectively) (1,878 ) (1,892 ) Total AES
Corporation stockholders’ equity 3,305 2,465 NONCONTROLLING
INTERESTS 2,404 2,380 Total equity 5,709 4,845
TOTAL LIABILITIES AND EQUITY $ 32,489 $ 33,112
THE AES CORPORATION Condensed Consolidated
Statements of Cash Flows (Unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018 2017
(in millions) (in millions) OPERATING ACTIVITIES: Net
income $ 191 $ 261 $ 1,384 $ 509 Adjustments to net income:
Depreciation and amortization 258 303 770 884 Loss (gain) on
disposal and sale of businesses 21 1 (856 ) 49 Impairment expenses
79 2 172 260 Deferred income taxes 38 15 221 (3 ) Provisions for
contingencies 1 7 1 30 Loss on extinguishment of debt 11 49 187 44
Net loss on sales of assets 21 15 23 34 Gain on sale of
discontinued operations (5 ) — (243 ) — Other 80 (29 ) 206 73
Changes in operating assets and liabilities (Increase) decrease in
accounts receivable (131 ) (159 ) (125 ) (279 ) (Increase) decrease
in inventory 20 (23 ) (13 ) (66 ) (Increase) decrease in prepaid
expenses and other current assets 90 (13 ) 15 140 (Increase)
decrease in other assets (37 ) (111 ) (22 ) (266 ) Increase
(decrease) in accounts payable and other current liabilities 61 293
(29 ) 162 Increase (decrease) in income taxes payable, net and
other taxes payable 1 57 (61 ) (4 ) Increase (decrease) in other
liabilities 68 71 51 134 Net cash
provided by operating activities 767 739 1,681
1,701 INVESTING ACTIVITIES: Capital expenditures (598 ) (464
) (1,592 ) (1,587 ) Acquisitions of businesses, net of cash and
restricted cash acquired, and equity method investments (24 ) (588
) (66 ) (590 ) Proceeds from the sale of businesses, net of cash
and restricted cash sold, and equity method investments (12 ) 6
1,796 39 Proceeds from the sale of assets — — 15 — Sale of
short-term investments 592 1,012 1,010 2,942 Purchase of short-term
investments (277 ) (797 ) (1,215 ) (2,673 ) Contributions to equity
affiliates (11 ) (6 ) (101 ) (49 ) Other investing 20 (22 )
(37 ) (37 ) Net cash used in investing activities (310 ) (859 )
(190 ) (1,955 ) FINANCING ACTIVITIES: Borrowings under the
revolving credit facilities 301 951 1,434 1,489 Repayments under
the revolving credit facilities (553 ) (327 ) (1,595 ) (851 )
Issuance of recourse debt — 500 1,000 1,025 Repayments of recourse
debt — (493 ) (1,781 ) (1,353 ) Issuance of non-recourse debt 317
871 1,509 2,703 Repayments of non-recourse debt (298 ) (749 )
(1,139 ) (1,731 ) Payments for financing fees (7 ) (16 ) (32 ) (96
) Distributions to noncontrolling interests (71 ) (79 ) (199 ) (263
) Contributions from noncontrolling interests and redeemable
security holders 12 15 40 59 Dividends paid on AES common stock (86
) (80 ) (258 ) (238 ) Payments for financed capital expenditures
(66 ) (39 ) (186 ) (100 ) Proceeds from sales to noncontrolling
interests — 60 — 60 Other financing 17 — 44
(26 ) Net cash provided by (used in) financing activities (434 )
614 (1,163 ) 678 Effect of exchange rate changes on
cash, cash equivalents and restricted cash (30 ) 15 (50 ) 21
(Increase) decrease in cash, cash equivalents and restricted cash
of discontinued operations and held-for-sale businesses (13 ) (92 )
56 (107 ) Total increase in cash, cash equivalents and
restricted cash (20 ) 417 334 338 Cash, cash equivalents and
restricted cash, beginning 2,142 1,881 1,788
1,960 Cash, cash equivalents and restricted cash, ending $
2,122 $ 2,298 $ 2,122 $ 2,298
SUPPLEMENTAL DISCLOSURES: Cash payments for interest, net of
amounts capitalized $ 161 $ 185 $ 683 $ 797 Cash payments for
income taxes, net of refunds $ 104 $ 73 $ 313 $ 291 SCHEDULE
OF NONCASH INVESTING AND FINANCING ACTIVITIES: Non-cash acquisition
of intangible assets $ 9 $ — $ 14 $ — Non-cash contributions of
assets and liabilities for Fluence acquisition $ — $ — $ 20 $ —
Non-cash exchange of debentures for the acquisition of the Guaimbê
Solar Complex $ 119 $ — $ 119 $ — Conversion of Alto Maipo loans
and accounts payable into equity $ — $ — $ — $ 279
THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
RECONCILIATION OF ADJUSTED PRE-TAX
CONTRIBUTION (PTC) AND ADJUSTED EPS
Adjusted PTC is defined as pre-tax income from continuing
operations attributable to The AES Corporation excluding gains or
losses of the consolidated entity due to (a) unrealized gains or
losses related to derivative transactions and equity securities;
(b) unrealized foreign currency gains or losses; (c) gains, losses,
benefits and costs associated with dispositions and acquisitions of
business interests, including early plant closures; (d) losses due
to impairments; (e) gains, losses and costs due to the early
retirement of debt; and (f) costs directly associated with a major
restructuring program, including, but not limited to, workforce
reduction efforts, relocations, and office consolidation. 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. Adjusted EPS is defined 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 and equity securities; (b)
unrealized foreign currency gains or losses; (c) gains, losses,
benefits and costs associated with dispositions and acquisitions of
business interests, including early plant closures, and the tax
impact from the repatriation of sales proceeds; (d) losses due to
impairments; (e) gains, losses and costs due to the early
retirement of debt; (f) costs directly associated with a major
restructuring program, including, but not limited to, workforce
reduction efforts, relocations, and office consolidation; and (g)
tax benefit or expense related to the enactment effects of 2017
U.S. tax law reform. 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 or equity securities,
unrealized foreign currency gains or losses, losses due to
impairments and strategic decisions to dispose of or acquire
business interests, retire debt or implement restructuring
activities, 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. Effective January 1, 2018, the Company changed the
definition of Adjusted PTC and Adjusted EPS to exclude unrealized
gains or losses from equity securities resulting from a newly
effective accounting standard. We believe excluding these gains or
losses provides a more accurate picture of continuing operations.
Factors in this determination include the variability due to
unrealized gains or losses related to equity securities
remeasurement. The Company has also reflected these changes in the
comparative period.
Three Months EndedSeptember 30,
2018
Three Months EndedSeptember 30,
2017
Nine Months EndedSeptember 30,
2018
Nine Months EndedSeptember 30,
2017
Net of NCI (1)
Per Share(Diluted)Net of NCI (1)
Net of NCI (1)
Per Share(Diluted)Net of NCI (1)
Net of NCI (1)
Per Share(Diluted)Net of NCI (1)
Net of NCI (1)
Per Share(Diluted)Net of NCI (1)
(in millions, except per share amounts) Income from
continuing operations, net of tax, attributable to AES and Diluted
EPS $ 102 $ 0.15 $
147 $ 0.22 $ 883 $
1.33 $ 176 $ 0.27 Add: Income
tax expense from continuing operations attributable to AES 120
69 411 139 Pre-tax contribution
$ 222 $ 216 $ 1,294
$ 315 Adjustments Unrealized derivative and
equity securities losses (gains) $ 16 $ 0.02 $ (8 ) $ (0.01 ) $ 4 $
0.01 $ (7 ) $ (0.01 ) Unrealized foreign currency losses (gains) (7
) — (21 ) (0.03 ) 42 0.06 (2) (54 ) (0.08 ) Disposition/acquisition
losses (gains) 17 0.02 1 — (822 ) (1.24 ) (3) 109 0.16 (4)
Impairment expense 80 0.12 (5) 2 — 172 0.26 (6) 264 0.40 (7) Losses
(gains) on extinguishment of debt (1 ) — 48 0.07
(8)
177 0.27 (9) 43 0.06 (10) Restructuring costs — — — — 3 — — — U.S.
Tax Law Reform Impact 0.05 (11) — 0.05 (11) — Less: Net income tax
expense (benefit) (0.01 ) (0.02 ) 0.14
(12) (0.15 ) (13)
Adjusted PTC and Adjusted EPS
$ 327 $ 0.35 $
238 $ 0.23 $ 870
$ 0.88 $ 670
$ 0.65 _____________________________
(1)
NCI is defined as Noncontrolling Interests.
(2)
Amount primarily relates to unrealized FX losses of $20 million, or
$0.03 per share, associated with the devaluation of long-term
receivables denominated in Argentine pesos, and unrealized FX
losses of $9 million, or $0.01 per share, on intercompany
receivables denominated in Euros at the Parent Company.
(3)
Amount primarily relates to gain on sale of Masinloc of $773
million, or $1.16 per share, gain on sale of Electrica Santiago of
$36 million, or $0.05 per share, and realized derivative gains
associated with the sale of Eletropaulo of $21 million, or $0.03
per share.
(4)
Amount primarily relates to loss on sale of Kazakhstan CHPs of $48
million, or $0.07 per share, realized derivative losses associated
with the sale of Sul of $38 million, or $0.06 per share, and costs
associated with early plant closures at DPL of $20 million, or
$0.03 per share.
(5)
Amount primarily relates to the asset impairment at a U.S.
generation facility of $73 million, or $0.11 per share.
(6)
Amount primarily relates to the asset impairment at a U.S.
generation facility of $156 million, or $0.23 per share.
(7)
Amount primarily relates to asset impairments at Kazakhstan HPPs of
$92 million, or $0.14 per share, Kazakhstan CHPs of $94 million, or
$0.14 per share, and DPL of $66 million, or $0.10 per share.
(8)
Amount primarily relates to loss on early retirement of debt at the
Parent Company of $38 million, or $0.06 per share.
(9)
Amount primarily relates to loss on early retirement of debt at the
Parent Company of $169 million, or $0.25 per share.
(10)
Amount primarily relates to losses on early retirement of debt at
the Parent Company of $92 million, or $0.14 per share, partially
offset by the gain on early retirement of debt at AES Argentina of
$65 million, or $0.10 per share.
(11)
Amount relates to a charge to true-up the provisional estimate of
U.S. tax reform of $33 million, or $0.05 per share.
(12)
Amount primarily relates to the income tax expense under the GILTI
provision associated with gain on sale of Masinloc of $155 million,
or $0.23 per share, and income tax expense associated with the gain
on sale of Electrica Santiago of $19 million, or $0.03 per share;
partially offset by income tax benefits associated with the loss on
early retirement of debt at the Parent Company of $52 million, or
$0.08 per share, and income tax benefits associated with the
impairment at a U.S. generation facility of $35 million, or $0.05
per share.
(13)
Amount primarily relates to the income tax benefit associated with
asset impairments of $82 million, or $0.12 per share.
The AES Corporation Parent Financial Information
Parent
only data: last four quarters
(in millions)
4 Quarters Ended
Total subsidiary
distributions & returns of capital to Parent
September 30, 2018 June 30, 2018 March 31,
2018 December 31, 2017 Actual
Actual Actual Actual Subsidiary
distributions (1) to Parent & QHCs $ 1,255 $ 1,240 $ 1,345 $
1,203 Returns of capital distributions to Parent & QHCs (67 )
(65 ) — —
Total subsidiary
distributions & returns of capital to Parent $
1,188 $ 1,175
$ 1,345 $ 1,203
Parent only data: quarterly (in millions)
Quarter
Ended
Total subsidiary
distributions & returns of capital to Parent
September 30, 2018 June 30, 2018 March 31,
2018 December 31, 2017 Actual
Actual Actual Actual Subsidiary
distributions (1) to Parent & QHCs $ 175 $ 270 $ 351 $ 459
Returns of capital distributions to Parent & QHCs —
— — (67 )
Total subsidiary
distributions & returns of capital to Parent $
175 $ 270 $
351 $ 392
Parent Company
Liquidity (2)
(in millions)
Balance at September 30, 2018 June
30, 2018 March 31, 2018 December 31, 2017
Actual Actual Actual
Actual Cash at Parent & Cash at QHCs (3) $ 43 $ 151 $ 76
$ 11 Availability under credit facilities 1,042 687
807 858
Ending liquidity
$ 1,085 $ 838
$ 883 $ 869
(1)
Subsidiary distributions should not be construed as an
alternative to Net Cash Provided by Operating Activities which is
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 available borrowings under existing credit facility 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’ 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181106005223/en/
The AES CorporationInvestor Contact:Ahmed Pasha,
703-682-6451orMedia Contact:Amy Ackerman, 703-682-6399
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