2018 Strategic Highlights
- Prepaid a total of $1 billion in Parent
debt in 2018, including accelerated payment of $150 million in the
fourth quarter, reducing Parent leverage to 3.95x, consistent with
investment grade metrics
- Completed construction of a total of
1.3 GW in 2018, including 215 MW of renewables in the fourth
quarter
- Signed long-term contracts for
approximately 2 GW in 2018, including 125 MW in the fourth quarter,
bringing backlog to 5.8 GW
- Continued success in signing new
long-term renewables contracts, leading to the introduction of a
longer-term target to reduce carbon intensity by 70% from 2016 to
2030; now expect to achieve a 50% reduction from 2016 to 2022
- Fluence energy storage JV with Siemens
awarded 286 MW of new projects in 2018, for a total of 766 MW
delivered or awarded
2018 Financial Results
- 2018 Diluted EPS of $1.48, compared to
a loss of $0.77 in 2017
- 2018 Adjusted EPS of $1.24, compared to
$1.08 in 2017 and 2018 guidance of $1.15 to $1.25
- Initiating 2019 guidance for Adjusted
EPS of $1.28 to $1.40 and expectation for 2019 Parent Free Cash
Flow of $700 to $750 million; targeting 7% to 9% annual growth in
Adjusted EPS and Parent Free Cash Flow through 2022
The AES Corporation (NYSE: AES) today reported financial results
for the year ended December 31, 2018.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20190227005185/en/
2019 Guidance and Expectations Through
2022 (Graphic: Business Wire)
"2018 was a very good year for AES, demonstrated by our strong
financial results and excellent progress toward achieving our
strategic goals, including enhancing the resilience of our
portfolio and increasing the profitability of our business. We
finished the year at the high end of our ranges for both Adjusted
EPS and Parent Free Cash Flow, completed construction of 1.3 GW of
new projects and grew our backlog to 5.8 GW," said Andrés Gluski,
AES President and Chief Executive Officer. "We expect to generate
$4 billion in discretionary cash through 2022, which we will
allocate to deliver double-digit annual total returns to our
shareholders."
"In 2018, we paid down $1 billion in Parent debt, including $150
million of accelerated repayments in the fourth quarter. As a
result, we achieved a key investment grade financial metric of
3.95x Parent leverage, one year ahead of our plan, providing us
more comfort in our ability to attain investment grade ratings in
2020," said Gustavo Pimenta, AES Executive Vice President and Chief
Financial Officer. "Reflecting our progress on our strategic goals,
and our increased confidence in our forecast, we are extending our
longer-term outlook by two years, and now expect 7% to 9% average
annual growth in Adjusted EPS and Parent Free Cash Flow through
2022."
Key Full Year 2018 Financial Results
Full year 2018 Diluted Earnings Per Share from Continuing
Operations (Diluted EPS) was $1.48, an increase of $2.25 compared
to full year 2017, reflecting 2018 gains on the sale of assets,
primarily in the Philippines, and the impact of the one-time
transition tax resulting from the enactment of the U.S. Tax Cuts
and Jobs Act, primarily recorded in 2017.
Full year 2018 Adjusted Earnings Per Share (Adjusted EPS, a
non-GAAP financial measure) increased $0.16 to $1.24, primarily
driven by higher margins, particularly at the Company's US and
Utilities and South America Strategic Business Units (SBUs), and
lower Parent Company interest expense. These impacts were partially
offset by asset sales in the Philippines and Kazakhstan.
Detailed Strategic Highlights
- In 2018, the Company paid down $1
billion in Parent debt, including $150 million in the fourth
quarter of 2018
- Reduced Parent debt by 21%, to $3,686
million, compared to December 31, 2017
- In December 2018, the Company achieved
a key investment grade financial metric of 3.95x Parent leverage
one year earlier than previously planned
- As of December 31, 2018, the Company's
backlog of 5,787 MW includes:
- 3,841 MW under construction and coming
on-line through 2021; and
- 1,946 MW of renewables signed under
long-term PPAs, including 125 MW in the fourth quarter of 2018:
- 80 MW Vientos Nequinos wind project
with commercial and industrial customers in Argentina
- 25 MW of solar capacity at AES
Distributed Energy (AES DE) with commercial and industrial
customers in the U.S.
- 20 MW Castilla solar project with
Ecopetrol in Colombia
- In 2018, the Company agreed to sell
approximately 48% of its interest in sPower's operating portfolio
- In October 2018, the Company signed the
first agreement to sell approximately 24% to a subsidiary of Ullico
Inc.
- In December 2018, the Company signed a
second agreement to sell approximately 24% to a private markets
infrastructure manager
- These transactions, once closed,
combined with other steps the Company has taken, including two
completed refinancings and a reduction in operating costs, will
increase the Company's return on sPower's operating portfolio to
13%
- Once these sales close, AES' ownership
in sPower's operating portfolio will decrease from 50% to
approximately 26%
- In 2018, the Company signed long-term
agreements to sell 25 TBTU of LNG annually in the Dominican
Republic, which will contribute to growth beyond 2020
Guidance and Expectations1
The Company is initiating 2019 guidance for Adjusted EPS of
$1.28 to $1.40, compared to 2018 Adjusted EPS of $1.24. The Company
also expects 2019 Parent Free Cash Flow of $700 to $750 million,
compared to 2018 Parent Free Cash Flow of $689 million. The Company
is also setting an annual growth rate target of 7% to 9% through
2022 for both Adjusted EPS and Parent Free Cash Flow, from a 2018
base.
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 reconciliation for its Adjusted EPS guidance without
unreasonable effort. See "Non-GAAP measures" for description of the
adjustments to reconcile Adjusted EPS to Diluted EPS. 2 2018
Adjusted EPS guidance was $1.15 to $1.25 and 2018 Parent Free Cash
Flow expectation was $600 million to $675 million. 3
From a base of 2018 Adjusted EPS of $1.24
and 2018 Parent Free Cash Flow of $689 million.
The Company's 2019 guidance, expectations and growth rate target
through 2022 are based on foreign currency and commodity forward
curves as of December 31, 2018.
Non-GAAP Financial Measures
See Non-GAAP Financial 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 Financial Measures
and Parent Financial Information.
Conference Call Information
AES will host a conference call on Wednesday, February 27,
2019 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
2385618. 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 2018 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
the execution of PPAs, conversion of our backlog and 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’ 2018 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 2018 Annual
Report on Form 10-K dated on or about February 27, 2019 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 Consolidated Statements of
Operations Year Ended December 31, 2018
2017 2016 (in millions, except per
share amounts) Revenue: Regulated $ 2,939 $ 3,109 $ 3,310
Non-Regulated 7,797 7,421 6,971 Total revenue
10,736 10,530 10,281 Cost of Sales: Regulated
(2,473 ) (2,650 ) (2,839 ) Non-Regulated (5,690 ) (5,415 ) (5,059 )
Total cost of sales (8,163 ) (8,065 ) (7,898 ) Operating margin
2,573 2,465 2,383 General and administrative
expenses (192 ) (215 ) (194 ) Interest expense (1,056 ) (1,170 )
(1,134 ) Interest income 310 244 245 Loss on extinguishment of debt
(188 ) (68 ) (13 ) Other expense (58 ) (58 ) (80 ) Other income 72
120 64 Gain (loss) on disposal and sale of business interests 984
(52 ) 29 Asset impairment expense (208 ) (537 ) (1,096 ) Foreign
currency transaction gains (losses) (72 ) 42 (15 ) Other
non-operating expense (147 ) — (2 ) INCOME FROM CONTINUING
OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES 2,018
771 187 Income tax expense (708 ) (990 ) (32 ) Net equity in
earnings of affiliates 39 71 36 INCOME (LOSS)
FROM CONTINUING OPERATIONS 1,349 (148 ) 191 Income (loss) from
operations of discontinued businesses, net of income tax benefit
(expense) of $(2), $(21), and $229, respectively (9 ) (18 ) 151
Gain (loss) from disposal and impairments of discontinued
businesses, net of income tax benefit (expense) of $(44), $0, and
$266, respectively 225 (611 ) (1,119 ) NET INCOME (LOSS)
1,565 (777 ) (777 ) Noncontrolling interests: Less: Income from
continuing operations attributable to noncontrolling interests and
redeemable stock of subsidiaries (364 ) (359 ) (211 ) Less: Loss
(income) from discontinued operations attributable to
noncontrolling interests 2 (25 ) (142 ) NET INCOME (LOSS)
ATTRIBUTABLE TO THE AES CORPORATION $ 1,203 $ (1,161 ) $
(1,130 ) AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON
STOCKHOLDERS: Income (loss) from continuing operations, net of tax
$ 985 $ (507 ) $ (20 ) Income (loss) from discontinued operations,
net of tax 218 (654 ) (1,110 ) NET INCOME (LOSS)
ATTRIBUTABLE TO THE AES CORPORATION $ 1,203 $ (1,161 ) $
(1,130 ) BASIC EARNINGS PER SHARE: Income (loss) from continuing
operations attributable to The AES Corporation common stockholders,
net of tax $ 1.49 $ (0.77 ) $ (0.04 ) Income (loss) from
discontinued operations attributable to The AES Corporation common
stockholders, net of tax 0.33 (0.99 ) (1.68 ) NET INCOME
(LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS $
1.82 $ (1.76 ) $ (1.72 ) DILUTED EARNINGS PER SHARE: Income
(loss) from continuing operations attributable to The AES
Corporation common stockholders, net of tax $ 1.48 $ (0.77 ) $
(0.04 ) Income (loss) from discontinued operations attributable to
The AES Corporation common stockholders, net of tax 0.33
(0.99 ) (1.68 ) NET INCOME (LOSS) ATTRIBUTABLE TO THE AES
CORPORATION COMMON STOCKHOLDERS $ 1.81 $ (1.76 ) $ (1.72 )
DIVIDENDS DECLARED PER COMMON SHARE $ 0.53 $ 0.49 $
0.45
THE AES CORPORATION
Consolidated Statements of Operations (Unaudited)
Three Months Ended December 31, 2018
2017 (in millions, except per share amounts) Revenue:
Regulated $ 724 $ 660 Non-Regulated 1,898 1,983 Total
revenue 2,622 2,643 Cost of Sales: Regulated (617 )
(562 ) Non-Regulated (1,359 ) (1,436 ) Total cost of sales (1,976 )
(1,998 ) Operating margin 646 645 General and
administrative expenses (58 ) (60 ) Interest expense (257 ) (310 )
Interest income 79 59 Loss on extinguishment of debt (1 ) (24 )
Other expense (21 ) 9 Other income 42 17 Gain (loss) on disposal
and sale of business interests 128 (3 ) Asset impairment expense
(42 ) (277 ) Foreign currency transaction gains (losses) (28 ) 28
Other non-operating expense (142 ) — INCOME FROM CONTINUING
OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES 346 84
Income tax expense (199 ) (744 ) Net equity in earnings of
affiliates 8 38 INCOME (LOSS) FROM CONTINUING
OPERATIONS 155 (622 ) Loss from operations of discontinued
businesses, net of income tax benefit of $0 and $3, respectively —
(53 ) Gain (loss) from disposal and impairments of discontinued
businesses 26 (611 ) NET INCOME (LOSS) 181 (1,286 )
Noncontrolling interests: Less: Income from continuing operations
attributable to noncontrolling interests and redeemable stock of
subsidiaries (53 ) (61 ) Less: Loss from discontinued operations
attributable to noncontrolling interests — 5 NET
INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION $ 128 $
(1,342 ) AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON
STOCKHOLDERS: Income (loss) from continuing operations, net of tax
$ 102 $ (683 ) Income (loss) from discontinued operations, net of
tax 26 (659 ) NET INCOME (LOSS) ATTRIBUTABLE TO THE AES
CORPORATION $ 128 $ (1,342 ) BASIC EARNINGS PER SHARE:
Income (loss) from continuing operations attributable to The AES
Corporation common stockholders, net of tax $ 0.15 $ (1.03 ) Income
(loss) from discontinued operations attributable to The AES
Corporation common stockholders, net of tax 0.04 (1.00 ) NET
INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON
STOCKHOLDERS $ 0.19 $ (2.03 ) DILUTED EARNINGS PER SHARE:
Income (loss) from continuing operations attributable to The AES
Corporation common stockholders, net of tax $ 0.15 $ (1.03 ) Income
(loss) from discontinued operations attributable to The AES
Corporation common stockholders, net of tax 0.04 (1.00 ) NET
INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON
STOCKHOLDERS $ 0.19 $ (2.03 ) DIVIDENDS DECLARED PER COMMON
SHARE $ 0.27 $ 0.25
THE AES
CORPORATION Strategic Business Unit (SBU) Information
(Unaudited)
Three Months EndedDecember
31,
Year EndedDecember 31,
(in millions) 2018 2017 2018
2017 REVENUE US and Utilities SBU $ 978 $ 983
$ 4,230 $ 4,162 South America SBU 869 875 3,533 3,252 MCAC SBU 452
399 1,728 1,519 Eurasia SBU 320 386 1,255 1,590 Corporate, Other
and Eliminations 3 — (10 ) 7 Total Revenue $ 2,622
$ 2,643 $ 10,736 $ 10,530
THE
AES CORPORATION Consolidated Balance Sheets
December 31, 2018
December 31, 2017
(in millions, except share
and per share data)
ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,166 $
949 Restricted cash 370 274 Short-term investments 313 424 Accounts
receivable, net of allowance for doubtful accounts of $23 and $10,
respectively 1,595 1,463 Inventory 577 562 Prepaid expenses 130 62
Other current assets 807 630 Current assets of discontinued
operations and held-for-sale businesses 57 2,034
Total current assets 5,015 6,398 NONCURRENT ASSETS
Property, Plant and Equipment: Land 449 502 Electric generation,
distribution assets and other 25,242 24,119 Accumulated
depreciation (8,227 ) (7,942 ) Construction in progress 3,932
3,617 Property, plant and equipment, net 21,396
20,296 Other Assets: Investments in and advances to
affiliates 1,114 1,197 Debt service reserves and other deposits 467
565 Goodwill 1,059 1,059 Other intangible assets, net of
accumulated amortization of $457 and $441, respectively 436 366
Deferred income taxes 97 130 Service concession assets, net of
accumulated amortization of $0 and $206, respectively — 1,360 Loan
receivable 1,423 — Other noncurrent assets 1,514 1,741
Total other assets 6,110 6,418 TOTAL ASSETS $
32,521 $ 33,112
LIABILITIES AND EQUITY CURRENT
LIABILITIES Accounts payable $ 1,329 $ 1,371 Accrued interest 191
228 Accrued non-income taxes 250 252 Accrued and other liabilities
962 980 Non-recourse debt, including $479 and $1,012, respectively,
related to variable interest entities 1,659 2,164 Current
liabilities of discontinued operations and held-for-sale businesses
8 1,033 Total current liabilities 4,399 6,028
NONCURRENT LIABILITIES Recourse debt 3,650 4,625
Non-recourse debt, including $2,922 and $1,358 respectively,
related to variable interest entities 13,986 13,176 Deferred income
taxes 1,280 1,006 Other noncurrent liabilities 2,723 2,595
Total noncurrent liabilities 21,639 21,402
Commitments and Contingencies 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 662,298,096 outstanding at December 31, 2018 and
816,312,913 issued and 660,388,128 outstanding at December 31,
2017) 8 8 Additional paid-in capital 8,154 8,501 Accumulated
deficit (1,005 ) (2,276 ) Accumulated other comprehensive loss
(2,071 ) (1,876 ) Treasury stock, at cost (154,905,595 and
155,924,785 shares at December 31, 2018 and 2017, respectively)
(1,878 ) (1,892 ) Total AES Corporation stockholders’ equity 3,208
2,465 NONCONTROLLING INTERESTS 2,396 2,380 Total
equity 5,604 4,845 TOTAL LIABILITIES AND EQUITY $
32,521 $ 33,112
THE AES
CORPORATION Consolidated Statements of Cash Flows
(Unaudited)
Three Months EndedDecember
31,
Year EndedDecember 31,
2018 2017 2018 2017
OPERATING ACTIVITIES:
(in millions) (in millions) Net
income (loss) $ 181 $ (1,286 ) $ 1,565 $ (777 ) Adjustments to net
income (loss): Depreciation and amortization 233 285 1,003 1,169
Loss (gain) on disposal and sale of business interests (128 ) 3
(984 ) 52 Impairment expenses 183 277 355 537 Deferred income taxes
92 675 313 672 Provisions for contingencies 13 4 14 34 Loss on
extinguishment of debt 1 24 188 68 Loss on sale and disposal of
assets 4 9 27 43 Net loss (gain) from disposal and impairments of
discontinued businesses (26 ) 611 (269 ) 611 Other 111 87 317 160
Changes in operating assets and liabilities: (Increase) decrease in
accounts receivable (81 ) 102 (206 ) (177 ) (Increase) decrease in
inventory (23 ) 38 (36 ) (28 ) (Increase) decrease in prepaid
expenses and other current assets (37 ) (33 ) (22 ) 107 (Increase)
decrease in other assets (10 ) (29 ) (32 ) (295 ) Increase
(decrease) in accounts payable and other current liabilities 91 1
62 163 Increase (decrease) in income tax payables, net and other
tax payables 54 57 (7 ) 53 Increase (decrease) in other liabilities
4 (22 ) 55 112 Net cash provided by operating
activities 662 803 2,343 2,504
INVESTING ACTIVITIES: Capital expenditures (529 ) (590 ) (2,121 )
(2,177 ) Acquisitions of business interests, net of cash and
restricted cash acquired — (19 ) (66 ) (609 ) Proceeds from the
sale of business interests, net of cash and restricted cash sold
224 69 2,020 108 Sale of short-term investments 292 598 1,302 3,540
Purchase of short-term investments (196 ) (637 ) (1,411 ) (3,310 )
Contributions to equity investments (44 ) (40 ) (145 ) (89 ) Other
investing (62 ) (25 ) (84 ) (62 ) Net cash used in investing
activities (315 ) (644 ) (505 ) (2,599 ) FINANCING ACTIVITIES:
Borrowings under the revolving credit facilities 431 667 1,865
2,156 Repayments under the revolving credit facilities (643 ) (891
) (2,238 ) (1,742 ) Issuance of recourse debt — — 1,000 1,025
Repayments of recourse debt (152 ) — (1,933 ) (1,353 ) Issuance of
non-recourse debt 419 519 1,928 3,222 Repayments of non-recourse
debt (272 ) (629 ) (1,411 ) (2,360 ) Payments for financing fees (7
) (4 ) (39 ) (100 ) Distributions to noncontrolling interests (141
) (161 ) (340 ) (424 ) Contributions from noncontrolling interests
and redeemable security holders 3 14 43 73 Dividends paid on AES
common stock (86 ) (79 ) (344 ) (317 ) Payments for financed
capital expenditures (89 ) (79 ) (275 ) (179 ) Proceeds from sales
to noncontrolling interests, net of transaction costs — 34 — 94
Other financing 57 (26 ) 101 (52 ) Net cash provided
by (used in) financing activities (480 ) (635 ) (1,643 ) 43
Effect of exchange rate changes on cash, cash equivalents and
restricted cash (4 ) (13 ) (54 ) 8 (Increase) decrease in cash,
cash equivalents and restricted cash of discontinued operations and
held-for-sale businesses 18 (21 ) 74 (128 ) Total
increase (decrease) in cash, cash equivalents and restricted cash
(119 ) (510 ) 215 (172 ) Cash, cash equivalents and restricted
cash, beginning 2,122 2,298 1,788 1,960
Cash, cash equivalents and restricted cash, ending $ 2,003 $
1,788 $ 2,003 $ 1,788 SUPPLEMENTAL
DISCLOSURES: Cash payments for interest, net of amounts capitalized
$ 320 $ 399 $ 1,003 $ 1,196 Cash payments for income taxes, net of
refunds 57 86 370 377 SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES: Non-cash acquisition of intangible assets 2 — 16 —
Non-cash contributions of assets and liabilities for the Fluence
transaction — — 20 — Non-cash exchange of debentures for the
acquisition of the Guaimbê Solar Complex — — 119 — Non-cash
acquisition of the remaining interest in a Distributed Energy
equity affiliate 23 — 23 — Dividends declared but not yet paid 90
86 90 86 Conversion of Alto Maipo loans and accounts payable into
equity — — — 279 Return Share Transfer Payment due — 75 — 75
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 and related regulations and any subsequent
period adjustments related to enactment effects.
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
remeasurement, 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
initiatives, 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. Given its large number of businesses
and complexity, the Company concluded that Adjusted PTC is a more
transparent measure that better assists investors in determining
which businesses have the greatest impact on the Company's results.
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,
respectively, which are determined in accordance with GAAP.
Effective January 1, 2018, the Company
changed the definitions 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.
THE AES CORPORATION NON-GAAP FINANCIAL
MEASURES (Unaudited) RECONCILIATION OF ADJUSTED
PRE-TAX CONTRIBUTION (PTC) AND ADJUSTED EPS
Three Months EndedDecember 31,
2018
Three Months EndedDecember 31,
2017
Twelve Months EndedDecember 31,
2018
Twelve Months EndedDecember 31,
2017
Net of NCI (1)
Per Share(Diluted) Netof NCI (1)
Net of NCI (1)
Per Share(Diluted) Netof NCI (1)
Net of NCI (1)
Per Share(Diluted) Netof NCI (1)
Net of NCI (1)
Per Share(Diluted) Netof NCI (1)
(in millions, except per share amounts) Income (loss)
from continuing operations, net of tax, attributable to AES and
Diluted EPS $ 102 $ 0.15 $
(683 ) $ (1.03 ) $
985 $ 1.48 $ (507 )
$ (0.76 ) (2) Add: Income tax expense
attributable to AES 152 689 563 828
Pre-tax contribution
$ 254 $ 6 $
1,548 $ 321 Adjustments Unrealized
derivative and equity securities losses (gains) $ 29 $ 0.05 $ 4 $
0.01 $ 33 $ 0.05 $ (3 ) $ — Unrealized foreign currency losses
(gains) 9 0.02 (5 ) (0.01 ) 51 0.09 (3) (59 ) (0.10 )
Disposition/acquisition losses (gains) (112 ) (0.17 ) (4) 14 0.02
(934 ) (1.41 ) (5) 123 0.19 (6) Impairment expense 135 0.20 (7) 278
0.42 (8) 307 0.46 (9) 542 0.82 (10) Loss on extinguishment of debt
3 — 19 0.03 (11) 180 0.27 (12) 62 0.09 (13) Restructuring costs (3
) — 31 0.05 — — 31 0.05 U.S. Tax Law Reform Impact 0.13 (14) 1.08
(15) 0.18 (16) 1.08 (15) Less: Net income tax expense (benefit)
(0.02 ) (0.14 ) (17) 0.12 (18)
(0.29 ) (19)
Adjusted PTC and Adjusted EPS $
315 $ 0.36 $ 347
$ 0.43 $ 1,185
$ 1.24 $ 1,017 $
1.08 _____________________________ (1)
NCI is defined as Noncontrolling Interests (2) In calculating
diluted loss per share under GAAP of ($0.77), the Company excluded
common stock equivalents from the weighted average shares as their
inclusion would be anti-dilutive. However, for purposes of
calculating Adjusted EPS, the impact of anti-dilutive common stock
equivalents of $0.01 was included, resulting in Non-GAAP diluted
loss per share of ($0.76). (3) Amount primarily relates to
unrealized FX losses of $22 million, or $0.03 per share, associated
with the devaluation of long-term receivables denominated in
Argentine pesos, and unrealized FX losses of $14 million, or $0.02
per share, on intercompany receivables denominated in Euros and
British pounds at the Parent Company. (4) Amount primarily relates
to gain on sale of CTNG of $86 million, or $0.13 per share and gain
on remeasurement of contingent consideration at AES Oahu of $32
million, or $0.05 per share. (5) Amount primarily relates to gain
on sale of Masinloc of $772 million, or $1.16 per share, gain on
sale of CTNG of $86 million, or $0.13 per share, gain on sale of
Electrica Santiago of $36 million, or $0.05 per share, gain on
remeasurement of contingent consideration at AES Oahu of $32
million, or $0.05 per share, gain on sale related to the Company's
contribution of AES Advancion energy storage to the Fluence joint
venture of $23 million, or $0.03 per share and realized derivative
gains associated with the sale of Eletropaulo of $21 million, or
$0.03 per share; partially offset by loss on disposal of the
Beckjord facility and additional shutdown costs related to Stuart
and Killen at DPL of $21 million, or $0.03 per share. (6) Amount
primarily relates to loss on sale of Kazakhstan CHPs of $49
million, or $0.07 per share, realized derivative losses associated
with the sale of Sul of $38 million, or $0.06 per share, loss on
sale of Kazakhstan HPPs of $33 million, or $0.05 per share, and
costs associated with early plant closures at DPL of $24 million,
or $0.04 per share; partially offset by gain on Masinloc contingent
consideration of $23 million, or $0.03 per share and gain on sale
of Miami Fort and Zimmer of $13 million, or $0.02 per share. (7)
Amount primarily relates to asset impairment at Nejapa of $37
million, or $0.06 per share and other-than-temporary impairment of
Guacolda of $96 million, or $0.14 per share. (8) Amount primarily
relates to asset impairments at Laurel Mountain of $121 million, or
$0.18 per share and DPL of $109 million, or $0.17 per share. (9)
Amount primarily relates to asset impairments at Shady Point of
$157 million, or $0.24 per share, and Nejapa of $37 million, or
$0.06 per share, and other-than-temporary impairment of Guacolda of
$96 million, or $0.14 per share. (10) Amount primarily relates to
asset impairments at Kazakhstan CHPs of $94 million, or $0.14 per
share, at Kazakhstan HPPs of $92 million, or $0.14 per share, at
Laurel Mountain of $121 million, or $0.18 per share, at DPL of $175
million, or $0.27 per share and at Kilroot of $37 million, or $0.05
per share. (11) Amount primarily relates to losses on early
retirement of debt at AES Gener of $20 million, or $0.02 per share.
(12) Amount primarily relates to loss on early retirement of debt
at the Parent Company of $171 million, or $0.26 per share. (13)
Amount primarily relates to losses on early retirement of debt at
the Parent Company of $92 million, or $0.14 per share, at AES Gener
of $20 million, or $0.02 per share, and at IPALCO of $9 million or
$0.01 per share; partially offset by a gain on early retirement of
debt at AES Argentina of $65 million, or $0.10 per share. (14)
Amount relates to a SAB 118 charge to finalize the provisional
estimate of one-time transition tax on foreign earnings of $161
million, or $0.24 per share, partially offset by a SAB 118 income
tax benefit to finalize the provisional estimate of remeasurement
of deferred tax assets and liabilities to the lower corporate tax
rate of $77 million, or $0.11 per share. (15) Amount relates to a
one-time transition tax on foreign earnings of $675 million, or
$1.02 per share and the remeasurement of deferred tax assets and
liabilities to the lower corporate tax rate of $39 million, or
$0.06 per share. (16) Amount relates to a SAB 118 charge to
finalize the provisional estimate of one-time transition tax on
foreign earnings of $194 million, or $0.29 per share, partially
offset by a SAB 118 income tax benefit to finalize the provisional
estimate of remeasurement of deferred tax assets and liabilities to
the lower corporate tax rate of $77 million, or $0.11 per share.
(17) Amount primarily relates to the income tax benefit associated
with asset impairment losses and restructuring costs of $66
million, or $0.10 and $10 million or $0.02 per share respectively
for the three months ended December 31, 2017. (18) Amount primarily
relates to the income tax expense under the GILTI provision
associated with the gains on sales of business interests, primarily
Masinloc, of $97 million, or $0.15 per share, and income tax
expense associated with gains on sale of CTNG of $36 million, or
$0.05 per share and Electrica Santiago of $13 million, or $0.02 per
share; partially offset by income tax benefits associated with the
loss on early retirement of debt at the Parent Company of $36
million, or $0.05 per share, and income tax benefits associated
with the impairment at Shady Point of $33 million, or $0.05 per
share. (19) Amount primarily relates to the income tax benefit
associated with asset impairments of $148 million, or $0.22 per
share.
The AES Corporation Non-GAAP
Financial Measures
Parent Company Cash Flow($ in
Millions)
2018 Subsidiary Distributions1 (a)
$ 1,186 Cash Interest (b) $ (244
) Corporate Overhead $ (187 ) Parent-Funded SBU Overhead $
(51 ) Business Development/Taxes $ (15 )
Cash for Development,
General & Administrative and Tax (c) $ (250
) Parent Free Cash Flow2 (a - b - c)
$ 689
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 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 Free Cash Flow (a non-GAAP financial measure)
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.
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
December 31,2018
September 30,2018
June 30,2018
March 31,2018
Actual Actual Actual
Actual Subsidiary distributions (1) to Parent & QHCs $
1,186 $ 1,255 $ 1,240 $ 1,345 Returns of capital distributions to
Parent & QHCs — (67 ) (65 ) —
Total subsidiary distributions & returns of capital to
Parent $ 1,186 $
1,188 $ 1,175
$ 1,345 Parent only data: quarterly (in
millions)
Quarter Ended
Total subsidiary
distributions & returns of capital to Parent
December 31,2018
September 30,2018
June 30,2018
March 31,2018
Actual Actual Actual
Actual Subsidiary distributions (1) to Parent & QHCs $
390 $ 175 $ 270 $ 351 Returns of capital distributions to Parent
& QHCs — — — —
Total subsidiary distributions & returns of capital to
Parent $ 390 $ 175
$ 270 $ 351
Parent Company
Liquidity (2)
(in millions)
Balance at
December 31,2018
September 30,2018
June 30,2018
March 31,2018
Actual Actual Actual
Actual Cash at Parent & Cash at QHCs (3) $ 24 $ 43 $ 151
$ 76 Availability under credit facilities 1,022 1,042
687 807
Ending liquidity
$ 1,046 $ 1,085
$ 838 $ 883
_____________________________
(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.
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version on businesswire.com: https://www.businesswire.com/news/home/20190227005185/en/
Investor Contact: Ahmed Pasha 703-682-6451Media Contact: Amy
Ackerman 703-682-6399
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