The AES Corporation · NYSE:AES

The AES — Investor Presentation (May 2015)

41 slides from The AES's investor presentation, May 2015

  1. Slide 1: The AES Corporation

    we are the energy The AES Corporation May 2015

  2. 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

  3. Slide 3: Value Proposition

    Value Proposition l Taking proactive steps to deliver on our commitments l Management track record of successful execution „ Reducing risk by exiting non-core markets and recycling capital; improving profitability (one-third reduction in overhead); capital allocation (20% Parent debt reduction, 1

  4. Slide 4: AES by the Numbers

    AES by the Numbers 18,500 Employees 4 Continents 6 GW Under Construction 18 Countries 200 8 Utilities 10 Million Distribution Customers 36 GW in Operation Contains Forward-Looking Statements 4

  5. Slide 5: Who We Are: 36,050 MW in Operation

    Who We Are: 36,050 MW in Operation Fuel Type SBU Oil, Diesel & Pet Coke Asia Renewables1 6% 7% Europe 31% Gas 23% 19% 34% US MCAC 9% 9% 40% Brazil 22% Coal Andes 1. Renewables includes: hydro, wind, solar, energy storage, biomass and landfill gas. Contains Forward-Looking Statements 5

  6. Slide 6: Businesses Managed in Six Strategic Business Units (SBUs)

    Businesses Managed in Six Strategic Business Units (SBUs) % = Adjusted PTC1 of $1.9 Billion Before Corporate Charges of $0.5 Billion 24% 19% Europe Bulgaria Jordan US Netherlands UK Kazakhstan United States 19% Mexico El Salvador Dominican Republic Puerto Rico India Vietnam Philippines 2% Asia MCAC

  7. Slide 7: Who We Are: 82% of Portfolio Businesses are Contracted or Utilities

    Who We Are: 82% of Portfolio Businesses are Contracted or Utilities 2015 Adjusted PTC1 by Contract Type Short-Term Sales (< 2 Years) Utilities 18% 18% Medium-Term 24% Contract Sales Long-Term (2-5 Years) 40% Contract Sales (5-25 Years) Average Remaining Contract Term is 7 Years2 1. A non-GAAP financ

  8. Slide 8: Maritza Signed Memorandum of Understanding with Offtaker, NEK

    Maritza Signed Memorandum of Understanding with Offtaker, NEK 690 MW Coal-Fired Maritza Plant in Bulgaria l Maritza and NEK agreed to: „ Reduce the capacity payment to Maritza by 14%, or ~7% reduction in total revenue1, through 2026 when the PPA expires „ NEK will pay its full outstanding receiva

  9. Slide 9: Re-Secured Rights to Coal Blocks

    Re-Secured Rights to Coal Blocks 1,320 MW Coal-Fired OPGC 2 Under Construction in India l In Q3 2014, the Supreme Court of India overturned allocations of 214 coal blocks, including OPGC 2 „ No impact on existing 420 MW OPGC 1 plant l Recently, a new joint venture between OPGC and our partner, th

  10. Slide 10: Reducing Complexity: Exited 10 Countries and Raised $3 Billion in Equity

    Reducing Complexity: Since September 2011, Exited 10 Countries and Raised $3 Billion in Equity Proceeds to AES Markets Exited 2011-2013 l China l France l Spain l Hungary l Czech Republic l Ukraine l Trinidad 2014 l Cameroon l Turkey l Nigeria Contains Forward-Looking Statements 10

  11. Slide 11: Leveraging Our Platforms: Brought On-Line 87% of Expected New Capacity

    Leveraging Our Platforms: Year-to-Date 2015, Brought On- Line 87% Expected New Capacity of 1,525 MW 7,131 MW Expected to Come On-Line 2015-2018 1,851 793 2,972 203 1,312 247 77 270 2012 2013 2014 Year-to-Date Year-to-Go 2016 2017 2018 2015 2015 Completed Under Construction Note: These are some of ou

  12. Slide 12: Leveraging Our Platforms: 5,819 MW Under Construction Yield More Than 15% ROE

    Leveraging Our Platforms: 5,819 MW Under Construction Yield More Than 15% ROE1 77% of 5,819 MW Under Construction in the Americas Asia 23% Europe 0.3% MCAC 2% 53% US 22% Andes $7 Billion Total Cost; AES Equity of $1.3 Billion, of Which Only $400 Million is Unfunded 1. Based on 2018 contributions fro

  13. Slide 13: Leveraging Our Platforms: Achieved Commercial Operation Six Months Early

    Leveraging Our Platforms: Achieved Commercial Operation Six Months Early 1,240 MW Coal-Fired Mong Duong 2 in Vietnam l 25-year PPA with state-owned utility l Amassed 18 million man-hours without a lost time incident l Solid platform for growth in Vietnam Contains Forward-Looking Statements 13

  14. Slide 14: Adjacent Opportunity: Energy Storage

    Adjacent Opportunity: Energy Storage World Leader in Battery-Based Energy Storage l Emerging opportunity l Well positioned to take advantage „ Global platform „ Early mover „ 8 years of experience l 86 MW in operation in the United States and Chile l 50 MW under construction in the United Sta

  15. Slide 15: Invested $3.7 Billion of Discretionary Cash in Shareholder Returns, Debt Paydown and Growth

    Invested $3.7 Billion of Discretionary Cash in Shareholder Returns, Debt Paydown and Select Growth Projects September 2011-December 2014; $ in Millions Share Buyback: 78 million shares at $12.69 Per Share $984 Debt Prepayment and $1,603 Refinancing $293 Shareholder Dividend $828 Investments in Subsi

  16. Slide 16: Reaffirming 2015 Adjusted EPS Guidance Range

    Reaffirming 2015 Adjusted EPS1 Guidance Range $1.25-$1.35 $1.25-$1.35 $0.03 $0.01 ($0.05) ($0.03) FY 2015 Guidance Currency/Commodity Hedging/Contracting Brazil (Incremental Early Completion of FY 2015 Guidance Changes Hydrology & Lower Mong Duong 2 12/31/14-3/31/15 Demand) 1. A non-GAAP financial m

  17. Slide 17: Adjusted EPS Growth Drivers

    Adjusted EPS1 Growth Drivers 6%-8% Average Expect Flat Annual Growth, More $1.25-$1.35 to Modest Growth Weighted Toward 2018 + Performance improvement + Completion of Mong Duong 2 + Completion of and Panama barge + Capital allocation 552 MW Cochrane project + 2017: Completion of 793 MW + Capital all

  18. Slide 18: 2015 Parent Capital Allocation Plan

    2015 Parent Capital Allocation Plan $ in Millions Discretionary Cash – Sources Discretionary Cash – Uses ($1,540-$1,640) ($1,540-$1,640) $1,540- Target Closing $475-$575 $1,640 $100 Debt Prepayment4 Cash Balance Discretionary $140- Cash to be $558 $345 $240 Allocated Expected Share $507 $281 Buyback

  19. Slide 19: Reaffirming 2015 Proportional Free Cash Flow Guidance

    Reaffirming 2015 Proportional Free Cash Flow1 Guidance $ in Millions 2016-2018 10%-15% Average Annual $1,000-$1,350 Growth + 5,819 MW of projects under construction on-line 2016-2018 + Full year of operations from 1,525 MW of projects on-line in 2015 + Incremental maintenance capex lower than increm

  20. Slide 20: Investment of $3.6 Billion of Discretionary Cash Will Increase Shareholder Value

    Investment of $3.6 Billion1 of Discretionary Cash Will Increase Shareholder Value 2015-2018; $ in Millions Committed Investments in Projects Under Construction $390 Debt Prepayment3 Discretionary Cash to be $345 Allocated $1,385 ● Incremental growth ● Debt reduction ● Dividend growth $1,120 Sharehol

  21. Slide 21: Value Proposition

    Value Proposition l Taking proactive steps to deliver on our commitments l Management track record of successful execution „ Reducing risk by exiting non-core markets and recycling capital; improving profitability (one-third reduction in overhead); capital allocation (20% Parent debt reduction, 1

  22. Slide 22: Appendix

    Appendix l Executive Compensation Slide 23 l Corporate Social Responsibility Slide 24 l Hydrology Slide 25 l 2015 Guidance Assumptions Slide 26 l 2015 Guidance Estimated Sensitivities Slide 27 l Currencies & Commodities Slides 28-29 l Construction Slide 30 l DPL Inc. Modeling Disclosures Sli

  23. Slide 23: 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 17% Vests over 3 years 80% Variable Vests over 3 years EBITDA less Maintenance & 29% 50% Environmental CapEx (3-Year Average) Performance Stock Units Tota

  24. Slide 24: Corporate Social Responsibility (CSR) Overview

    Corporate Social Responsibility (CSR) Overview Benefit >600 thousand 100+ Community-oriented investment programs people directly and 24 million people indirectly Example Programs Education on Vocational Health Education Safety Training Community Rural Environmental Energy Infrastructure Electrificat

  25. Slide 25: Hydrology

    Hydrology Colombia, Chile & Argentina Panama Brazil TOTAL ● In 2014, Chivor in ● Inflows have ● Expect 2015 hydro Colombia had improved to close to conditions to be stronger inflows long-term average worse than 2014 versus the rest of the country, leading to ● Spot prices down ● Expect to cover favo

  26. Slide 26: Key Assumptions for 2015 Guidance

    Key Assumptions for 2015 Guidance l Currency and commodity forward curves as of March 31, 2015 l Current hydrological outlook in Latin America „ In line with expectations, except in Brazil „ No rationing expected in 2015 in Brazil „ Now expect $0.07 per share impact from poor hydrology in Brazi

  27. Slide 27: Year-to-Go 2015 Guidance Estimated Sensitivities

    Year-to-Go 2015 Guidance Estimated Sensitivities l 100 bps move in interest rates over year-to-go 2015 is equal to a change in EPS of approximately $0.02 Interest Rates1 l 10% appreciation in USD against the following key currencies is equal to the following negative EPS impacts: 2015 Average Rate

  28. Slide 28: 2015 Foreign Exchange Risk Mitigated Through Structuring and Active Hedging

    2015 Foreign Exchange (FX) Risk Mitigated Through Structuring of Our Businesses and Active Hedging 2015 Adjusted PTC1 2015 Full Year FX Sensitivity2,3 by by Currency SBU (Cents Per Share) KZT Other FX GBP 4% 1% EUR 2% 7% COP 1.0 6% 1.0 0.5 BRL USD- 11% Equivalent 0.0 2.0 69% 1.5 1.5 1.0 US Andes Bra

  29. Slide 29: Commodity Exposure is Largely Hedged Through 2016

    Commodity Exposure is Largely Hedged Through 2016, Long on Natural Gas and Oil in Medium- to Long-Term Full Year 2017 Adjusted EPS1 Commodity Sensitivity2 for 10% Change in Commodity Prices 4.0 Cents Per Share 2.0 0.0 Coal Gas Oil DPL Power (2.0) (4.0) l Mostly hedged through 2016, more open positi

  30. Slide 30: Attractive Returns from 2015-2018 Construction Pipeline

    Attractive Returns from 2015-2018 Construction Pipeline $ in Millions, Unless Otherwise Stated Gross Expected Total AES Project Country AES Ownership Fuel MW COD Total Capex Equity ROE Comments Construction Projects Coming On-Line 2015-2018 Guacolda V Chile 35% Coal 152 2H 2015 $454 $48 Andes Solar

  31. Slide 31: DPL Inc. Modeling Disclosures

    DPL Inc. Modeling Disclosures Based on Market Conditions and Hedged Position as of March 31, 2015 Balance of Year 2015 Full Year 2016 Full Year 2017 Volume Production (TWh) 10 14 13 % Volume Hedged ~67% ~51% ~16% Average Hedge Dark Spread ($/MWh) $13.16 $11.27 $13.03 EBITDA Generation Business1,2 ($

  32. Slide 32: Non-Recourse Debt at DP&L and DPL Inc.

    Non-Recourse Debt at DP&L and DPL Inc. $ in Millions Amount Outstanding as Series Interest Rate Maturity of March 31, 2015 Remarks 2013 First Mortgage Bonds 1.875% September 2016 $445.0 ● Callable at make-whole T+20 2005 Boone County, KY Pollution Control 4.7% January 2028 $35.3 ● Non-callable; call

  33. Slide 33: Outstanding Debt as of December 31, 2014

    Outstanding Debt as of December 31, 2014 $ in Millions l 70% of proportional debt is non-recourse $20,858 l Proportional non-recourse debt characteristics: $16,993 „ 57% at generation businesses w Average remaining life of 12 years w Average interest rate of 4.73% $15,600 w 94.7% denominated i

  34. Slide 34: Reduced 2015-2018 Parent Debt Maturities from $840 Million to $181 Million

    Reduced 2015-2018 Parent Debt Maturities from $840 Million to $181 Million $ in Millions Prepaid $315 Million & Refinanced Majority of Near-Term Maturities with Long-Term Debt $4,836 $4,417 $525 $151 $164 $181 2015 2016 2017 2018 2019-2029 12/31/14 4/30/15 Since 2011, Reduced Parent Debt by $1.5 Bil

  35. Slide 35: Reducing Complexity: Since September 2011, Exited 10 Countries

    Reducing Complexity: Since September 2011, Exited 10 Countries $ in Millions Proceeds to AES Business Country Remarks September 2011- December 2012 2013 2014 2015 Total Atimus (Telecom) Brazil $284 $284 Non-core asset; Paid down $197 million1 in debt at Brasiliana subsidiary Bohemia Czech Republic $

  36. Slide 36: Expanding Access to Capital: Strategic Partners Have Invested $2.5 Billion

    Expanding Access to Capital: Strategic Partners Have Invested $2.5 Billion in Our Subsidiaries $ in Millions Strategic Business Country Partner 2013 2014 2015 Total Mitsubishi Cochrane Chile Corporation $145 $145 Antofagasta Alto Maipo Chile Minerals $361 $361 Silver Ridge Power (Solar) Various Goog

  37. Slide 37: Reconciliation of Full Year Adjusted PTC & Adjusted EPS

    Reconciliation of Full Year Adjusted PTC1 & Adjusted EPS1 FY 2014 FY 2013 $ in Millions, Except Per Share Amounts Per Share Per Share Net of NCI2 (Diluted) Net of Net of NCI2 (Diluted) Net of NCI2 and Tax NCI2 and Tax Loss (Income) from Continuing Operations Attributable to AES and Diluted EPS $789

  38. Slide 38: Reconciliation of 2015 Guidance

    Reconciliation of 2015 Guidance $ in Millions, Except Per Share Amounts 2015 Guidance Adjusted EPS1 $1.25-$1.35 Proportional Free Cash Flow1 $1,000-$1,350 Consolidated Net Cash Provided by Operating $1,900-$2,700 Activities Reconciliation Consolidated Adjustment Factor Proportional Consolidated Net

  39. Slide 39: 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

  40. Slide 40: Definitions

    Definitions l 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 de

  41. Slide 41: Definitions (Continued)

    Definitions (Continued) l 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

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