AES Reports First Quarter 2014 Adjusted Earnings Per Share Of $0.24; Continues To Selectively Invest In Capital Efficient, High Return Platform Expansion Opportunities

The AES Corporation (NYSE: AES) today reported Adjusted Earnings Per Share (Adjusted EPS, a non-GAAP financial measure) of $0.24 for first quarter 2014, a decrease of $0.03 from first quarter 2013. First quarter 2014 results include a $0.03 negative impact from forced outages and lack of gas availability during extremely cold weather in January at DPL in the United States. These results also include the positive contributions from capital allocation decisions, which resulted in reduced Parent interest expense and a lower share count. The Company also benefited from improved operating performance at several businesses in Europe, Central America and Brazil.

First quarter 2014 Diluted Earnings Per Share from Continuing Operations decreased $0.22 to $(0.07) from first quarter 2013. These results were driven primarily by $0.17 of impairments, largely at DPL, where the Company impaired all of the goodwill associated with its retail business, reflecting continued margin compression and lower than expected retail growth, and $0.13 of expenses associated with refinancing near-term Parent debt maturities with longer-term, lower-coupon debt.

"Hydrology has been poor so far this year, especially in Panama and Brazil, and could have a full year negative impact of $0.07 to $0.10 per share. We are taking actions to mitigate this impact, through increased cost management efforts, accelerated capital allocation and strategic initiatives," said Andrés Gluski, AES President and Chief Executive Officer. "In the first quarter, we closed a number of capital efficient platform expansions and brought in equity partners to optimize our overall risk profile. We will continue to compete all investment opportunities with stock buybacks and debt paydowns to maximize shareholder returns."

"Although our first quarter results were affected by forced outages and a gas shortage at DPL in the U.S., they also reflect positive contributions from operational improvements in Europe, Central America and Brazil," said Tom O'Flynn, AES Executive Vice President and Chief Financial Officer. "We also benefited from our capital allocation decisions, resulting in lower Parent interest and a 3% reduction in our share count."
   
Table 1: Key Financial Results
         
$ in Millions, Except Per Share Amounts First Quarter

Full Year 2014 Guidance
2014   2013
Adjusted EPS 1 $ 0.24 $ 0.27 $1.30 - $1.38
Diluted EPS from Continuing Operations $ (0.07 ) $ 0.15 N/A
Proportional Free Cash Flow 1 $ 129 $ 361 $1,000 - $1,300
Consolidated Net Cash Provided by Operating Activities   $ 221     $ 618     $2,200 - $2,800

1
 

A non-GAAP financial measure. See “Non-GAAP Financial Measures” for definitions and reconciliations to the most comparable GAAP financial measures.
 

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   First Quarter
2014   2013   Variance
US $ 75 $ 133 $ (58 )
Andes 53 81 (28 )
Brazil 69 42 27
MCAC 65 56 9
EMEA 115 96 19
Asia   8     31     (23 )
Total SBUs $ 385 $ 439 $ (54 )
Corp/Other   (142 )   (169 )   27  
Total AES Adjusted PTC1,2 $ 243 $ 270 $ (27 )
Adjusted Effective Tax Rate 30 % 26 %
Diluted Share Count 727 749
Adjusted EPS 1   $ 0.24     $ 0.27     $ (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 $30 million and $12 million of after-tax adjusted equity in earnings for first quarter 2014 and first quarter 2013, respectively.
 

For the three months ended March 31, 2014, Adjusted EPS was $0.24, including a $0.03 negative impact from forced outages and a gas shortage at DPL in the United States. First quarter 2013 results were $0.27, including $0.04 received from the Beaver Valley PPA termination payment. First quarter 2014 results reflect $0.03 of contributions from capital allocation decisions, which resulted in reduced Parent interest expense and a 3% lower share count, and $0.02 of improved operating performance at several businesses in Europe, Central America and Brazil.

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