The AES Corporation · NYSE:AES
The AES — Investor Presentation (December 2014)
34 slides from The AES's investor presentation, December 2014
Slide 1: The AES Corporation
The AES Corporation December 2014
Slide 2: Safe Harbor Disclosure
Safe Harbor Disclosure Certain statements in the following presentation regarding AES’ business operations may constitute “forward-looking statements.” Such forward-looking statements include, but are not limited to, those related to future earnings growth and financial and operating performance. Fo
Slide 3: Executive Summary
Executive Summary Diversified portfolio of largely contracted generation and utilities Executing on our strategy: Decreasing costs through economies of scale and benchmarking Reducing complexity and improving returns by exiting select markets and redeploying the proceeds Leveraging existin
Slide 4: Who We Are: A Diversified Power Generation and Distribution Company
Who We Are: A Diversified Power Generation and Distribution Company FY 2014 Adjusted PTC1: $1.9 Billion Before Corporate Charges of $0.6 Billion Asia 2% US EMEA3 24% 19% Andes MCAC2 23% Americas 19% Brazil 79% 13% 1. A non-GAAP financial measure. See Appendix for definition and reconciliation. 2. Me
Slide 5: Who We Are: 80% of Portfolio Businesses are Contracted or Utilities
Who We Are: 80% of Portfolio Businesses are Contracted or Utilities 2014 Adjusted PTC1 by Contract Type Short-Term Sales (< 2 Years) Utilities 17% 19% Medium-Term Contract Sales 27% Long-Term (2-5 Years) 37% Contract Sales (5-25 Years) Average Remaining Contract Term is 7 Years2 1. A non-GAAP financ
Slide 6: Reducing Complexity and Expanding Access to Capital
Reducing Complexity and Expanding Access to Capital $ in Millions $3 Billion in Asset Sale Proceeds $1,846 $2,980 $234 $900 2011-2012 2013 2014 Total Contains Forward-Looking Statements 6
Slide 7: Leveraging Our Platforms: Projects Under Construction Yield More Than 15% ROE
Leveraging Our Platforms: Projects Under Construction Yield More Than 15% ROE1 MW Additions by Year 4,741 MW, Plus 2,400 MW of MATS AES Equity Investments of Upgrades Under Construction $1.3 Billion 1,851 US 793 19% Asia 38% 2,400 1,525 572 43% MCAC 0.6% Chile2 2015 2016 2017 2018 New Capacity Under
Slide 8: Leveraging Our Platforms: Development at Southland (California)
Leveraging Our Platforms: Development at Southland (California) Awarded 20-Year PPAs for 1,384 MW of Capacity 1,284 MW of gas-fired capacity Construction expected to begin in 2017 and commercial operations in 2020 100 MW of interconnected battery- based energy storage First time energy stora
Slide 9: Leveraging Our Platforms: Development at IPL (Indiana)
Leveraging Our Platforms: Development at IPL (Indiana) Environmental Compliance Investments Applied for approval from the Indiana Utility Regulatory Commission for $332 million investment Compliance with wastewater regulations Operations expected in the second half of 2017 Conversion of 410
Slide 10: Invested $3.7 Billion of Discretionary Cash in Shareholder Returns, Debt Paydown and Select Growth Projects
Invested $3.71 Billion of Discretionary Cash in Shareholder Returns, Debt Paydown and Select Growth Projects September 2011-December 2014; $ in Millions Shareholder Dividend Investments in $293 Subsidiaries2 $831 Share Buyback: $1,008 72 million shares at $12.43 Per Share3 $1,604 Debt Prepayment and
Slide 11: Investment of $3 Billion of Discretionary Cash Will Increase Shareholder Value
Investment of $3 Billion1 of Discretionary Cash Will Increase Shareholder Value 2015-2018; $ in Millions Shareholder Dividend2 $1,120 Allocated Amongst: ● Growth projects to $1,600 compete against share repurchases ● Dividend growth Committed Investments in $138 Projects Under $200 Construction Cred
Slide 12: 100% Increase in Dividend
100% Increase in Dividend $ in Millions $280 Expect dividend to grow 10% 100% increase to annually and Parent Free Cash $0.10 per share Flow1 growth of 10%-15% through per quarter 2018 2015 dividend represents a payout ~$145 ratio of 55% of 2015 Parent FCF1 ~$1202 ~$120 Dividend typically revi
Slide 13: Adjusted EPS Growth Expectations Unchanged for 2015-2016
Adjusted EPS1 Growth Expectations Unchanged for 2015- 2016; Higher Dividend Yield Offsets Slightly Lower Adjusted EPS1 Growth in 2017-20182 6%-8% Average Annual Growth, Expect flat More Weighted $1.30-$1.40 to modest Toward 2018 growth + Performance improvement + Completion of $1.25-$1.31 572 MW Coc
Slide 14: Proportional Free Cash Flow Expectations Strong and Growing
Proportional Free Cash Flow (Prop FCF)1 Expectations $ in Millions 2016-2018 10%-15% $1,000-$1,350 Average Annual Growth $900-$1,000 Key Drivers Key Drivers + US (DPL): Improved + 7,141 MW of projects under availability construction on-line through 2018 + Andes (Gener): Improved operations; lower +
Slide 15: 2014 Parent Capital Allocation Plan
2014 Parent Capital Allocation Plan $ in Millions Discretionary Cash – Sources Discretionary Cash – Uses ($1,675-$1,745) ($1,675-$1,745) Shareholder $1,675- Target Closing Dividend $100 $465-$535 $43 $1,745 Outstanding Cash Balance Buyback $145 Authorization $109- To be Allocated $1,035 $150 $279 Co
Slide 16: 2015 Parent Capital Allocation Plan
2015 Parent Capital Allocation Plan $ in Millions Discretionary Cash – Sources Discretionary Cash – Uses ($1,190-$1,290) ($1,190-$1,290) $1,190- Current Target Closing $475-$575 $46 $1,290 Shareholder Cash Balance Dividend $100 $280 $369 Committed Investments in $50 $300 Subsidiaries $560- $660 To b
Slide 17: Key Takeaways
Key Takeaways Diversified portfolio of largely contracted generation and utilities Executing on our strategy: Decreasing costs through economies of scale and benchmarking Reducing complexity and improving returns by exiting select markets and redeploying the proceeds Leveraging existing pl
Slide 18: Appendix
Appendix Executive Compensation Slide 19 FY 2014 Adjusted PTC1 Modeling Ranges Slide 20 FY 2015 Adjusted EPS1 Guidance Slide 21 FY 2015 Adjusted PTC1 Modeling Ranges Slide 22 2014 Guidance Estimated Sensitivities Slide 23 2015 Guidance Estimated Sensitivities Slide 24 Currency and Comm
Slide 19: Executive Compensation Aligned with Shareholders' Interests
Executive Compensation Aligned with Shareholders’ Interests Compensation1 Key Factors Restricted Stock Units 12% Vests over 3 years Stock Options 18% Vests over 3 years 81% Variable Vests over 3 years EBITDA less Maintenance & 50% Environmental CapEx (3-Year Average) Performance Stock Units 30% Tota
Slide 20: Full Year 2014 Adjusted EPS Guidance of $1.25-$1.31
Full Year 2014 Adjusted EPS1 Guidance of $1.25-$1.31 $ in Millions Prior 2014 Current 2014 Adjusted PTC1 Adjusted PTC1 Direction vs. SBU Modeling Range2 Modeling Range2 Drivers Prior Range (Provided (Provided 2/26/14) 11/6/14) + IPL favorable wholesale margin US $390-$440 + $430-$460 + Wind performa
Slide 21: 2015 Adjusted EPS Guidance Range of $1.30-$1.40
2015 Adjusted EPS1 Guidance Range of $1.30-$1.40 $0.06 $0.10 $1.30-$1.40 $1.25-$1.31 ($0.05) ($0.05) 2014 Guidance Poor Hydrology in Lower Plant Reversals of Other Macro Headwinds 2015 Guidance 2014 - Expect Availability at DPL Liabilities in Q2 (FX and Brazil: Normal Hydrology & Masinloc in 2014 20
Slide 22: Full Year 2015 Adjusted PTC Modeling Range
Full Year 2015 Adjusted PTC1 Modeling Range $ in Millions Adjusted PTC1 Modeling SBU Drivers Range2 US $450-$490 + DPL operating performance Andes $390-$430 - Hydrology in Colombia Brazil $200-$230 - 2014 one-time gain at Sul in Q2 2014 + Hydrology in Panama MCAC $395-$435 - Ancillary services in th
Slide 23: Year-to-Go 2014 Guidance Estimated Sensitivities
Year-to-Go 2014 Guidance Estimated Sensitivities Interest Rates1 100 bps move in interest rates over YTG 2014 is equal to a change in EPS of approximately $0.01 10% appreciation in USD against the following key currencies is equal to the following negative EPS impacts: YTG 2014 Average Rate Sens
Slide 24: 2015 Guidance Estimated Sensitivities
2015 Guidance Estimated Sensitivities Interest Rates1 100 bps move in interest rates over FY 2015 is equal to a change in EPS of approximately $0.03 10% appreciation in USD against the following key currencies is equal to the following negative EPS impacts: 2015 Average Rate Sensitivity Argentin
Slide 25: 2015 FX Risk Mitigated Through Structuring and Active Hedging
2015 Foreign Exchange (FX) Risk Mitigated Through Structuring of Our Businesses and Active Hedging 2015 Adjusted PTC1: $2 Billion 2015 Full Year FX Sensitivity2,3 FX Risk by Currency by SBU (Cents Per Share) KZT Other FX GBP 4% 2% 4% EUR 8% 0.5 COP 0.5 7% 0.5 USD- 0.0 3.5 Equivalent 2.5 63% 2.0 BRL
Slide 26: Commodity Exposure is Largely Hedged Through 2015
Commodity Exposure is Largely Hedged Through 2015, Long on Natural Gas and Oil in Medium- to Long-Term Full Year 2017 Adjusted EPS1 Commodity Sensitivity2 for 10% Change in Commodity Prices 8.0 6.0 Cents Per Share 4.0 2.0 0.0 Coal Gas Oil Correlated Total (2.0) (4.0) (6.0) Primarily hedged in 2014
Slide 27: Attractive Returns from 2015-2018 Construction Pipeline
Attractive Returns from 2015-2018 Construction Pipeline $ in Millions, Unless Otherwise Stated Total Gross Expected Project Country AES Ownership Fuel Total Capex AES ROE Comments MW COD Equity Construction Projects Coming On-Line 2014-2018 Tunjita Colombia 71% Hydro 20 1H 2015 $67 $21 Lease capital
Slide 28: DPL Inc. Modeling Disclosures
DPL Inc. Modeling Disclosures Based on Market Conditions and Hedged Position as of September 30, 2014 Full Year 2014 Full Year 2015 Full Year 2016 Volume Production (TWh) 14 13 13 % Volume Hedged >85% ~70% ~35% EBITDA Generation Business1,2 ($ in Millions) $100 to $110 per year EBITDA DPL Inc. inclu
Slide 29: Non-Recourse Debt at DP&L and DPL Inc.
Non-Recourse Debt at DP&L and DPL Inc. $ in Millions Amount Outstanding as of Series Interest Rate Maturity Remarks September 30, 2014 ● Callable at make-whole 2013 First Mortgage Bonds 1.875% September 2016 $445.0 T+20 2006 OH Air Quality Pollution ● Non-callable; callable at par 4.8% September 203
Slide 30: Reconciliation of 2014 Guidance
Reconciliation of 2014 Guidance $ in Millions, Except Per Share Amounts 2014 Guidance Adjusted EPS1 $1.25-$1.31 Proportional Free Cash Flow1 $900-$1,000 Consolidated Net Cash Provided by Operating $1,800-$2,200 Activities Reconciliation Consolidated Adjustment Factor Proportional Consolidated Net Ca
Slide 31: Reconciliation of 2015 Guidance
Reconciliation of 2015 Guidance $ in Millions, Except Per Share Amounts 2015 Guidance Adjusted EPS1 $1.30-$1.40 Proportional Free Cash Flow1 $1,000-$1,350 Consolidated Net Cash Provided by Operating $2,000-$2,800 Activities Reconciliation Consolidated Adjustment Factor Proportional Consolidated Net
Slide 32: Assumptions
Assumptions Forecasted financial information is based on certain material assumptions. Such assumptions include, but are not limited to: (a) no unforeseen external events such as wars, depressions, or economic or political disruptions occur; (b) businesses continue to operate in a manner consistent
Slide 33: Definitions
Definitions Adjusted Earnings Per Share (a non-GAAP financial measure) 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 der
Slide 34: Definitions (Continued)
Definitions (Continued) Proportional Metrics – The Company is a holding company that derives its income and cash flows from the activities of its subsidiaries, some of which are not wholly-owned by the Company. Accordingly, the Company has presented certain financial metrics which are defined as P