http://www.morningstar.com/earnings/49114802-the-aes-corporation-aes-q4-2012.aspx

The AES Corporation AES
Q4 2012 Earnings Call Transcript

Transcript Call Date 02/27/2013

Operator: Good morning and thank you for standing by. At this time all participants are on listen-only. After the presentation, we will conduct a question-and-answer session. I would like to inform participants that Today's call is being recorded. If anyone has any objections, you may disconnect at this time.

I would now like to turn the call over to your conference host to Mr. Ahmed Pasha. Sir, you may begin.

Ahmed Pasha - VP, IR: Thank you, Trey. Good morning, and welcome to the fourth quarter and full year 2012 Earnings call of The AES Corporation. Our earnings release, presentation and related financial information are available on our website at aes.com.

Today, we will be making forward-looking statements during the call. There are many factors that may cause future results to differ materially from these statements. Please refer to our SEC filings for a discussion of these factors.

Joining me this morning are Andres Gluski, our President and Chief Executive Officer; Tom O'Flynn, our Chief Financial Officer; and other senior members of our management team.

With that, I will now turn the call over to Andres.

Andres Gluski - President and CEO: Thanks Ahmed. Good morning, everyone. We appreciate your joining us today. I'll begin with the quick review of our 2012 and then update you on our longer term strategy. Tom will then discuss our results and 2013 guidance in more detail.

On Slide 4, we've finished 2012 with strong operating and financial results, with adjusted EPS of $1.24. This represents a 22% increase relative to 2011 and is the highest adjusted EPS that we have achieved in the last 10 years. Similarly we recorded a 33% increase in proportional free cash flow.

These results were achieved despite headwinds at three of our larger businesses, AES Gener, Electropaulo and DP&L and reflect our commitment to pull multiple levers including share repurchases and cost reductions to deliver results.

Also in 2012, we made significant progress in executing on our strategic plan which we laid out in September of 2011. At that time we identified three primary objectives for enhancing shareholder value as described on Slide 5.

First, improving the profitability of our existing portfolio; second, narrowing our geographic and business focus through asset sales to simplify our story, reduce risk, and enhance our returns and third, optimizing capital allocation. I will review our progress on each of these three objectives since we started to implement the plan.

First, with respect to improving the profitability of our portfolio, we are focused on three key areas. As you can see on Slide 6, by rationalizing corporate overhead and development costs, we have reduced G&A expenses by $90 million. I am pleased to report that this is 38% more than our updated 2012 target of $65 million in savings.

We are also looking hard at lowering the operating cost of our businesses as discussed on Slide 7. To that end we have reorganized into six market facing strategic business units, or SBUs. This reorg will allow us to better align the businesses within each region, extract synergies across the portfolio and be more responsive to changes in the marketplace.

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