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AES Reports 2013 Adjusted EPS Of $1.29 And Proportional Free Cash Flow Of $1.2 Billion

Stocks in this article: AES

The AES Corporation (NYSE:AES) today reported Adjusted Earnings Per Share (Adjusted EPS, a non-GAAP financial measure) of $1.29 for full year 2013, an increase of $0.08 from full year 2012. Despite the challenges of dry hydrological conditions in Latin America and a provision related to potential customer refunds at Eletropaulo in Brazil, Adjusted EPS results for the year increased 7%, as a result of capital allocation decisions, lower global G&A and a lower than expected effective tax rate. Full year 2013 Diluted Earnings Per Share from Continuing Operations increased to $0.38 from a loss of $1.27, driven largely by lower impairment expenses, though the Company did record a $307 million, or $0.41 per share, charge for a goodwill impairment at DPL in fourth quarter 2013.

"In 2013, we achieved our key operational and financial goals and made significant progress on executing our strategy. We lowered our global administrative expenses by another $53 million, bought back 25 million shares for $321 million and allocated $464 million for Corporate debt reduction," said Andrés Gluski, AES President and Chief Executive Officer. "At the same time, to drive long-term growth, we started construction on two new platform expansion projects totaling 1,851 MW, Alto Maipo and OPGC II, both of which will come on-line in 2018."

"Despite one of the worst years for hydrology in Latin America, we met or exceeded our guidance for both Adjusted EPS and Proportional Free Cash Flow," said Tom O'Flynn, AES Executive Vice President and Chief Financial Officer. "Our strong and growing free cash flow provides us capital to drive higher total returns for shareholders."

                         

Table 1: Key Financial Results

                                 

$ in Millions, Except Per Share

Amounts

Fourth Quarter Full Year

Full Year 2013

Guidance

2013         2012 2013         2012
Adjusted EPS 1 $ 0.29 $ 0.31 $ 1.29 $ 1.21 $1.24 to $1.32
Diluted EPS from Continuing Operations $ (0.23 ) $ 0.29 $ 0.38 $ (1.27 ) N/A
Proportional Free Cash Flow 1, 2 $ 314 $ 293 $ 1,161 $ 1,242 $750 to $1,050 million

Consolidated Net Cash Provided by

Operating Activities

            $ 675           $ 772           $ 2,715           $ 2,901         $2,500 to $3,100 million
 

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 all environmental capex. The Company has modified its definition of Proportional Free Cash Flow to exclude recoverable environmental capex, treating those investments as growth capex. Table 1, above reflects the prior definition. Results under the new definition for fourth quarter 2013, fourth quarter 2012, full year 2013 and full year 2012 were $349 million, $294 million, $1,271 million and $1,250 million, respectively. Period-over-period analysis below reflects the modified definition.

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 the Caribbean), EMEA (Europe, Middle East and Africa), and Asia.

               

Table 2: Adjusted PTC 1  by SBU and Adjusted EPS 1

                     
$ in Millions, Except Per Share Amounts Fourth Quarter Year-to-date December 31,
2013       2012       Variance 2013       2012       Variance
US $ 112 $ 89 $ 23 $ 440 $ 403 $ 37
Andes $ 78 $ 102 $ (24 ) $ 353 $ 369 $ (16 )
Brazil $ 8 $ 74 $ (66 ) $ 212 $ 321 $ (109 )
MCAC $ 83 $ 122 $ (39 ) $ 339 $ 387 $ (48 )
EMEA $ 110 $ 87 $ 23 $ 345 $ 375 $ (30 )
Asia           $ 41         $ 60         $ (19 )       $ 142         $ 201         $ (59 )
Total SBUs $ 432 $ 534 $ (102 ) $ 1,831 $ 2,056 $ (225 )
Corporate and Other           $ (167 )       $ (195 )       $ 28         $ (624 )       $ (717 )       $ 93  
Total AES Adjusted PTC 1,2 $ 265 $ 339 $ (74 ) $ 1,207 $ 1,339 $ (132 )
Adjusted Effective Tax Rate 18 % 30 % 21 % 32 %
Diluted Share Count 744 748 748 760
Adjusted EPS 1           $ 0.29         $ 0.31         $ (0.02 )       $ 1.29         $ 1.21         $ 0.08  
 
1   A non-GAAP financial measure. See “Non-GAAP Financial Measures” for definitions and reconciliations to the most comparable GAAP financial measures.
2 Includes $7 million and ($4) million of after-tax adjusted equity in earnings for fourth quarter 2013 and fourth quarter 2012, respectively. Includes $59 million and $53 million of after-tax adjusted equity in earnings for full year 2013 and full year 2012, respectively.
 

For the three months ended December 31, 2013, Adjusted EPS decreased $0.02 to $0.29, primarily as a result of a $0.02 headwind from poor hydrology in Panama and a one-time $0.04 expense related to potential customer refunds at Eletropaulo. These impacts were partially offset by capital allocation decisions, including debt repayment earlier in 2013 and improvements in global G&A expense. Results also reflect the $0.05 benefit from a lower than expected tax rate of 18% versus 30% in the fourth quarter of 2012.

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