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Share Name | Share Symbol | Market | Type |
---|---|---|---|
AES Corp | NYSE:AES | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.26 | -1.37% | 18.67 | 19.68 | 18.345 | 18.70 | 11,127,623 | 01:00:00 |
Highlights
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:
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:
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:
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:
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.Highlights
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 — 27Net 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 $ 0.13Loss 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 $ 8,573THE AES CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
June 30, 2015 December 31, 2014 (in millions, except shareand 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’ EQUITYCommon 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 $ 38,966THE 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 $ 13THE 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 $ 0.13Add 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 ParentJune 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 ParentJune 30,2015
March 31,2015
December 31,2014
September 30,2014
Actual Actual Actual Actual Subsidiary distributions to Parent & QHCs $ 235 $ 175 $ 414 $ 295Returns 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 atJune 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 $ 229Availability 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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