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(MENAFN - Asia Pulse) The AES Corporation (NYSE:AES) today reported results for the third quarter ended September 30, 2009.
"The strong quarterly performance was driven by higher margins at our generation businesses in Chile and in the Philippines. Contributions from these businesses helped us offset weak results at our North American operations which were negatively impacted by lower volumes.
Based on our year-to-date results, we are increasing our 2009 adjusted earnings and free cash flow guidance," said Paul Hanrahan, AES President and Chief Executive Officer. "We also continued to make good progress on our 3,500 MW construction program and have now completed 808 MW of which 95% is contracted under long-term contracts. On the development front, strong regulatory support for renewable energy and the growing need for power in various high growth markets continue to provide us with attractive opportunities that will drive our growth beyond 2011."
Third Quarter 2009 Financial Highlights: During the quarter, AES benefited from improved operating performance at its generation businesses in Chile and the Philippines as well as its Brazilian utilities. The Company's focus on improvements in working capital and continued efforts to lower operating expenses also contributed to the third quarter results. These trends helped offset unfavorable foreign currency impacts, as well as reduced demand and lower wholesale prices in North America.
Results for the quarter ended September 30, 2009 include the following: ? ThirdQuarter2009 ? ThirdQuarter2008 ? YTD9/30/09 ?
Full Year2009 Guidance as of 8/7/09 ? Full Year2009 Guidanceas of 11/5/09 Consolidated Revenue $3.8 B ? $4.3 B ? $10.7 B ? NA ? NA ? Consolidated Gross Margin $1.0 B $1.0 B $2.7 B $3.5 - $3.6 B $3.55 - $3.65 B ? Proportional Gross Margin (a non-GAAP financial measure) $555 M $601 M $1.6 B $2.1 - $2.15 B $2.1 - $2.15 B ? Consolidated Cash Flow from Operating Activities $1.0 B $803 M $1.9 B $2.1 - $2.2 B $2.1 - $2.2 B ? Proportional Cash Flow from Operating Activities (a non-GAAP financial measure) $553 M $430 M $1.2 B $1.25 - $1.35 B $1.3 - $1.35 B ?
Consolidated Free Cash Flow (a non-GAAP financial measure) $884 M $662 M $1.5 B $1.4 - $1.5 B $1.45 - $1.55 B ? Proportional Free Cash Flow (a non-GAAP financial measure) $459 M $330 M $850 M $750 - $850 M $825 - $875 M ? Subsidiary Distributions to the Parent Company (see definitions) $202 M $184 M $1.0 B
$1.2 - $1.3 B $1.2 - $1.3 B ? Diluted EPS from Continuing Operations $0.28 $0.22 $1.06 $1.15 - $1.20 $1.20 - $1.24 ?
Diluted EPS $0.28 $0.22 $1.06 NA NA ? Adjusted EPS (a non-GAAP financial measure) ? $0.26 ? $0.31 ? $0.91 ? $1.05 - $1.10 ?
$1.07 - $1.11 ? Key drivers of the third quarter results include (comparison of Q3 2009 vs. Q3 2008): Consolidated Revenue decreased by $481 million to $3.8 billion. Of that amount, $367 million or 76 percent was due to the strengthening of the U.S. Dollar relative to foreign currencies. In particular, the Brazilian Real depreciated 13 percent, representing more than $200 million of the decline in revenue.
In addition, lower commodity input prices translated into lower revenues at its generation businesses in Chile, New York, Hungary and Northern Ireland. The Latin America utilities business contributed higher revenues primarily as a result of increases in tariff rates in Brazil, reflecting the recovery of energy purchases that were passed through to customers.
Consolidated Gross Margin increased by $46 million to $1.0 billion, benefiting from improved operating performance at its generation businesses in Chile and the Philippines, as well as the recovery of bad debts at Eletropaulo, one of the Company's utilities in Brazil.
These improvements were offset in part by the strengthening of the U.S. Dollar relative to foreign currencies totaling $79 million and lower volume at Eastern Energy in New York due to unfavorable electricity pricing, resulting in lower dispatch.
Proportional Gross Margin (a non-GAAP financial measure, see Appendix for definition and reconciliation) decreased by $46 million to $555 million, primarily due to the unfavorable impact of foreign exchange rates, as well as lower volumes at its wholly-owned generation business in New York and its integrated utility in Indiana, IPL. These factors were offset in part by improved operations at Gener in Chile and Masinloc in the Philippines.
Consolidated Cash Flow from Operating Activities increased by $225 million to $1.0 billion, reflecting higher gross margin and $91 million of improved working capital at its generation business in Chile. In addition, collection of receivables at its generation businesses in Pakistan helped improve working capital by approximately $81 million.
Proportional Cash Flow from Operating Activities (a non-GAAP financial measure, see Appendix for definition and
reconciliation) increased by $123 million to $553 million.
Consolidated Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $222 million to $884 million. The 2009 quarterly results reflect the improvement in Consolidated Cash Flow from Operating Activities.
Proportional Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $129 million to $459 million.
Diluted Earnings Per Share (EPS) from Continuing Operations increased $0.06 per share to $0.28 per share.
Adjusted EPS (a non-GAAP financial measure, see Appendix for definition and reconciliation) decreased $0.05 per share to $0.26 per share. The 2008 results include $0.07 gain associated with a tax restructuring and the release of a tax liability at two of the Company's North America subsidiaries.
? Q3 2009 ? Q3 2008 Diluted Earnings Per Share from Continuing Operations$0.28 ? $0.22 FAS 133 Mark-to-Market (Gains)/Losses $0.03 $0.01 Currency Transaction (Gains)/Losses ($0.03) $0.06
Disposition/Acquisition (Gains)/Losses ($0.02) - Impairment Losses - $0.02 Debt Retirement (Gains)/Losses - ? - Adjusted Earnings Per Share ? $0.26 ? $0.31 See Appendix for more detail.
Year-to-Date 2009 Financial Highlights (comparison of Q3 2009 YTD vs. Q3 2008 YTD): The Company's continued focus on improving operations, lowering corporate overhead and improving working capital contributed to the year-to-date results. In particular, the Company benefited from improved operating performance at its generation businesses in Chile and Asia, as well as its businesses in Brazil. These improvements helped offset unfavorable foreign currency impacts as well as reduced demand and lower wholesale prices in North America.
Key drivers of the year-to-date results include: Consolidated Revenue decreased by $1.8 billion to $10.7 billion. Of that amount, $1.5 billion, or 83 percent, was due to the strengthening of the U.S. Dollar relative to foreign currencies. In particular, the Brazilian Real depreciated 24 percent, representing approximately $1.0 billion of the decline in revenue. In addition, lower commodity input prices translated into lower revenue at the Company's generation businesses in Chile, New York, Hungary and Northern Ireland.
The results also reflect (i) the decrease in volume at Uruguaiana in Brazil due to the renegotiation of its power sales agreements in 2009, and (ii) the sale of the Northern Kazakhstan assets in May 2008. Latin American utilities contributed higher revenues, primarily as a result of tariff increases in Brazil and El Salvador, reflecting the recovery of energy purchases that were passed through to customers.
Consolidated Gross Margin decreased by $295 million to $2.7 billion.
The decline in Consolidated Gross Margin was primarily due to the strengthening of the U.S. Dollar relative to key currencies totaling $316 million and a net mark-to-market, non-cash derivative gain of approximately $67 million recorded in 2008. Gross Margin benefited from improved operating performance at the Company's generation businesses in Chile and the Philippines, as well as the restructuring of power sales agreements for its Uruguaiana generation business in Brazil.
These improvements were offset by lower electricity prices and volume at the Company's generation businesses in Argentina and New York, as well as the loss of contribution from the Northern Kazakhstan businesses sold in May 2008.
Proportional Gross Margin (a non-GAAP financial measure, see Appendix for definition and reconciliation) declined by $346 million to $1.6 billion, primarily due to: lower electricity prices and volumes at the Company's generation businesses in Argentina and New York; unfavorable net mark-to-market derivative adjustments at North America subsidiaries; unfavorable foreign currency exchange rates; and loss of the contribution from the Northern Kazakhstan businesses sold in 2008.
These decreases were offset in part by improved operations in Chile and the Philippines.
Consolidated Cash Flow from Operating Activities increased by $312 million to $1.9 billion, reflecting higher gross margin at the Company's generation businesses in Chile and the Philippines. In addition, collection of receivables at the Company's generation businesses in Pakistan and lower fuel inventories in Chile improved working capital.
Proportional Cash Flow from Operating Activities (a non-GAAP financial measure, see Appendix for definition and
reconciliation) increased by $436 million to $1.2 billion.
Consolidated Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $388 million to $1.5 billion. The 2009 results reflect both higher Consolidated Operating Cash Flow and lower maintenance capital expenditures.
Proportional Free Cash Flow (a non-GAAP financial measure, see Appendix for definition and reconciliation) increased by $482 million to $850 million.
Diluted EPS from Continuing Operations of $1.06 per share, compared to $1.87 per share in 2008. The 2009 results include a $98 million or $0.15 gain related to the final settlement of the Northern Kazakhstan assets sold in 2008. The 2008 results include a net gain from sale of Northern Kazakhstan assets of $1.05.
Adjusted EPS (a non-GAAP financial measure, see Appendix for definition and reconciliation), of $0.91, compared to $0.91 per share in 2008. The 2009 results exclude a $98 million or $0.15 gain related to the final settlement of the Northern Kazakhstan assets sold in 2008, $0.03 of non-cash, unrealized foreign currency transaction gains and $0.05 of non-cash mark-to-market derivative losses.
? Q3 YTD 2009 ? Q3 YTD 2008 Diluted Earnings Per Share from Continuing Operations$1.06 ? $1.87 FAS 133 Mark-to-Market (Gains)/Losses $0.05 ($0.07) Currency Transaction (Gains) Losses ($0.03) $0.10
Disposition/Acquisition (Gains)/Losses ($0.19) ($1.31) Impairment Losses $0.02 $0.07 Debt Retirement (Gains)/Losses - ? $0.25 Adjusted Earnings Per Share ? $0.91 ? $0.91 See Appendix for more detail.
Other Key Highlights: Began commercial operation of 434 MW of generation capacity, including the 380 MW combined cycle natural gas facility Amman East in Jordan, the 49.5 MW wind facility Huanghua I in China, and 4 MW of Innovent wind projects in France. The Company has completed 808 MW, or approximately 23 percent of its 3,500 MW construction program.
Raised approximately $80 million of long-term financing for 10 MW of solar photovoltaic projects in Western Europe, all of which are located in markets with attractive feed-in tariffs.
North America utility IPL received a $20 million SmartGrid grant from the U.S. Department of Energy to install an advanced meter system.
Voluntarily reduced the remaining portion of the Company's senior unsecured credit facility with Merrill Lynch in October.
2009 Guidance Based on the Company's performance through the first nine months of 2009 and the current outlook for the remainder of the year, the Company is increasing its full year earnings guidance and Proportional Cash Flow guidance.
Summary of key changes made to 2009 full year guidance includes:
Increased midpoint of Adjusted Earnings Per Share (a non-GAAP financial measure) range by $0.01 to $1.09.
Increased midpoint of Diluted Earnings Per Share from Continuing Operations range by $0.04 to $1.22.
Increased midpoint of Proportional Free Cash Flow (a non-GAAP financial measure) range by $50 million to $850 million.
Non-GAAP Financial Measures See Non-GAAP Financial Measures for definitions of Adjusted Earnings Per Share, Proportional Gross Margin, Proportional Operating Cash Flow, Free Cash Flow, Proportional Free Cash Flow and Parent Company Liquidity, as well as reconciliations to the most comparable GAAP financial measure.
Attachments Consolidated Statements of Operations, Segment Information, Consolidated Balance Sheets, Consolidated Statements of Cash Flows, Non-GAAP Financial Measures, Parent Financial Information and 2009 Financial Guidance.
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