W:

Thank you, Allison. Good morning and welcome to AES' fourth quarter and full-year 2015 earnings call. 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?

Thanks, Ahmed and good morning, everyone. Today I would like to start this call with a brief review of 2015. Then I'll provide an update on the trends we're seeing across our portfolio, our action plans and the net impact of all these factors on our 2016 guidance and long term expectations. As you are all aware, we faced significant macroeconomic headwinds in 2015, including an average devaluation of nearly 30% on our non-U.S. dollar denominated businesses. We also faced the decline of more than 5% in demand at our distribution businesses in Brazil which is now in a deep recession. Both of these challenges are persisting in 2016 and we're taking actions to mitigate their impact on our financial results. Nonetheless, we continued to execute well on our long term strategy to create sustainable shareholder value, simplifying our geographic footprint, improving our balance sheet and debt profile, fine-tuning our financial exposure by bringing in partners at the business and project level and profitably expanding our local platform. As a result of our consistent actions, in 2015, we were able to generate free cash flow of $1.24 billion, up 39% compared to 2014 and $66 million above the mid-point of our guidance range. This was reflected in the $531 million of parent free cash flow we generated which is $8 million higher than 2014. And we increased our quarterly dividend for the third consecutive year to $0.11 per share, up 10% versus the previous year. Unfortunately, we were unable to overcome all of the $0.11 impact from macroeconomic headwinds we faced and our resulting adjusted earnings per share was $1.22, down from $1.30 in 2014. This was within our revised guidance range, but $0.03 below the low end of the guidance we gave at the beginning of the year. Regarding…

Thanks Andres and good morning everyone. Today I'll review our full-year results including proportional free cash flow, adjusted EPS, proportional free cash flow and adjusted pre-tax contribution or PTC by strategic business unit or SBU. Then I'll cover our 2015 capital allocation, our 2016 guidance and longer term expectations, as well as our 2016 capital allocation. Turning to slide 17, full-year adjusted EPS of $1.22 was $0.08 lower than 2014. At a high level, we were impacted by the $0.11 impact from the roughly 30% average devaluation in foreign currencies primarily the Brazilian real and Colombian peso, lower operating results in Brazil due to lower demand and a general economic slowdown, as well as lower commodity prices particularly in the Dominican Republic. These negative drivers were partially offset by a reduction in share count of 6% of 40 million shares, lower parent interest expense and a slightly lower tax rate, as well as improved hydrology in Panama and the benefit of new businesses including Mong Duong in Vietnam. Turning to slide 18, overall, we generated $1.2 billion of proportional free cash flow, an increase of $350 million from last year, even though operating margin was down. As expected, in the Dominican Republic or DR, we settled our outstanding receivables. And in Chile we recovered delayed VAT payments for the construction of Cochrane and Alto Maipo. We previously expected to be in the low end of our range, if the PPA amendment and collection of receivables at Maritza in Bulgaria did not close. Although it's been delayed until 2016, we came in above the mid-point of our range as a result of improved collections and working capital improvements across our portfolio, some of which came late in 2015 rather than our prior expectation to collect in 2016. We also earned $1.15…

Thanks, Tom. As we have discussed, the macro environment has been and continues to be challenging. However, our strategy will allow us to weather the unfavorable macroeconomic environment. And just as importantly, it will allow us to continue to reposition our portfolio in spite of near term headwinds. Furthermore, we will be able to capture the financial upside, when these trends reverse. In the meantime, our portfolio generates strong and growing free cash flow. And consistent with our track record, we will continue to cut costs, streamline our business and allocate our discretionary cash to maximize value for our shareholders. With that, I would now like to open the call for questions. Operator?

[Operator Instructions]. And our first question will come from Julien Dumoulin-Smith of UBS. Please go ahead.

So a quick question here, in terms of target leverage. You've talked a lot about debt repayment this morning and just broader debt paydown strategies. What's your ultimate target ratios as you guys sit here today? Has it evolved much?

Well, I would say the first -- we paid down about $1.5 billion of debt over the past four years, so we've been very consistent in this. And so, every time we sell-down something, we also pay down some debt. Now let's say our target is to have sort of -- I would say, thinking longer term like 2019, 2020 to have sort of investment grade-like statistics and be like a strong BB by 2018.

And how much debt -- further debt pay down you need to do? I mean, are on track with your current trajectory of debt pay down? Or what's the total quantum per year you would need to get there, to be clear?

Yes, Julien, this is Tom. I'd just add -- to be consistent what we said in the past, I think we said, maybe $100 million to $200 million a year. This year, we're on the high end of that range, $200 million. I think if we're hitting our numbers, then $100 million a year would be appropriate. But we believe would generally stick, at least for the next couple of years, 2017 to 2018, with a range of $100 million to $200 million.

Okay. But you would hit IG, if at that pace?

We would hit IG stats. The ratings are obviously a broader issue. But if you look over a three, five-year period, we would hit IG stats over that horizon

And then just following -- a couple little items, just in terms of setting expectations. Do you expect asset sales -- is there any reason to think about that for this year? And then, also in terms of the new assets that you announced, the Masinloc 2, the Panama combined cycle, what are the specific EPS contributions from each of those plants once they reach in-service, at least in your initial expectation?

Okay. Regarding asset sales, what we've said is that we think on average, we'd been selling around $200 million-plus per year. Last year, we did a bit more, we did $500 million. I think the way to think about it -- we will exit certain markets when we think the time is right, but we'll also sell-down positions to get partnership money to reinvest it in these new projects. Now regarding the EPS contributions, what we've said is that on average, our projects will have a return on equity -- so the first three years of full operation of around 15%. It's going to vary a lot project by project, but I think what's important is we have -- are repositioning this portfolio. 90% of the new projects of that sort of 7 gigawatts that we've had, are U.S. dollar denominated, 80% of the new projects are in the U.S. and Chile. So we're repositioning this portfolio to be more contracted, more dollar-based and in countries with strong markets.

And quick last question, the EBITDA you provide in -- for DPL, is that reflect any above market assumptions for the ESP in forward years?

What we provided in there for the reliability rider, as we said in the past, it's incorporated into our numbers and it is a modest increase, versus what we had as a non-bypassable [ph] in the past.

Our next question will come from Ali Agha of SunTrust. Please go ahead.

My first question, what is your confidence level in the revised earnings outlook for 2016? Given the ongoing global turmoil, how much cushion have you given yourselves, if things get even worse than at right now?

Yes. Well, we always give guidance based on sensitivities and based on commodities and based on FX at a period in time. So we feel very confident that we can deliver this, based on those numbers. If you have a further deterioration, we have the sensitivities. Now we have also engaged in some hedging which Tom can talk about, to lessen that. I think that if you look over the years, we've always outperformed our guidance based on the numbers at the beginning of the year. What has happened is that the commodities and FX have moved in a negative direction.

Okay. I guess, a second question on Brazil. There has been some stories suggesting potential exit from maybe Eletropaulo Sul. You alluded to Sul in your comments. Can you give us a sense what you are looking at there in Brazil? And maybe bigger picture, if you are not looking for an exit, what is the strategic rationale for staying there, given the disproportionately negative impact that Brazil has to your overall stock and valuation, given such a small contribution to earnings, given the outlook that is not looking any positive, why are you in Brazil?

Let's step back a little bit. Since about 2006, when I got involved in Brazil to date, we've sold down probably about 70% of Eletropaulo. Until the last two years, Brazil actually was a pretty good contributor to our earnings and cash flow. Now I agree that the prospectus for Brazil -- for 2015, was a terrible year. I think 2016 is going to be bad. We don't expect a recovery in energy demand until about 2018. This is true. But I think you have to remember, that we only own16% of Eletropaulo. At today's market valuation, that's about $60 million of equity positions, it's relatively small. It's a publicly-listed company, so we're not going to comment on it. But I would say that we've been consistent in our strategy of let's say, of focusing our position in Brazil. And for example, when there was sort of an -- asset prices were high. There was a lot of pressure on us from -- to lever up Tiete and buy assets. We never did, because we never thought that those were good investments. So looking at the good, big picture for Brazil, we have 2,006 megawatts of hydro. They are very well-contracted over the next couple of years, at much higher than today's spot prices. I thinking in the future, it's going to be hard to get that kind of hydro assets at a reasonable price. So Brazil, again is in tough times. It's going to take some time to work its way out of it. But on the other hand, I think we have to take a longer term perspective of the AES' presence in Brazil, not referring to any specific asset.

But the comment on regarding Sul, Andres does that apply to distribution exposure in general in Brazil? Which in the past you've said has been a challenging market for you?

Again I said, we've -- I'm not going to comment on Eletropaulo, it's a publicly traded company. But regarding Sul, referring to Tom's speech, we're going to look at all strategic alternatives. With the refinancing, with this capital injection and refinancing, this will give us a year's grace. And we will look at alternatives of how to make Sul more efficient and what makes the most sense for our shareholders.

Okay. Last question, sort of more bigger picture, at what point would you be willing to step back and look dispassionately at the portfolio, Andres and perhaps followed the logic that some of us espouse, that the sum of the parts may be greater than the whole and does it make sense to maybe look at unlocking equity value, by perhaps breaking up some of the pieces of this Company? Would with ever occur in your mind or what's your thinking --?

Well, I think it certainly has occurred. I think we been very dispassionate. I mean, we've sold one-third of this portfolio. And I think that, if you go back and look at the prices we sold at and the timing, I think overall, we'd have to get a pretty good grade. So we always look very dispassionately -- we work for shareholders. What we're doing I think in many cases, is capturing a lot of that value through our partnerships and using that money to reposition this portfolio. So we will look at all alternatives. We've always said that. I think maybe a year ago, yieldcos were in fashion. A lot of people were saying, why don't you do a yieldco? We really thought that we -- from a fundamental point of view and that's how we always look at things, dispassionately and fundamentally, that partnerships made more sense. They were cheaper. They didn't create obligations for new investments and we think that strategy has played out. So certainly, we have an open mind and from time to time, we look at this. But it has to be something that, really fundamentally unlocks the value and is not something perhaps that's -- I don't know what the word would be, in style or with other people -- we're always open to look at all alternatives. I think we been very dispassionate, in terms of our sale decisions. And we always look at things, again from a fundamental point of view, whether that's investing new money. If we put new money in, for example into Sul, it's because we think that there is significant equity value there. So we do not have some emotional attachments to specific businesses.

Our next question will come from Chris Turnure of JPMorgan. Please go ahead.

Going back to the balance sheet, I wanted to get an update -- or first, I guess, just clarify comments that you made to one of the earlier questions on your deleveraging intent, kind of slowly over time through the end of the decade here. Has anything really changed there over the past 6 or 12 months or so, as a result of Forex and commodity prices and some of the pressures that you've been under? Because it sounds to me like you're trying to paint a relatively consistent message here? And then conversely also, on debt capacity at some of your subsidiaries, could you talk about and just give us an update on Tiete and where that $500 million of capacity stands today? And then, maybe also any incremental availability at Gener or in Europe?

No, I think, our overall credit improvement comments are consistent with what we've said. And when we say, our credit ratio and credit statistic improvement, there's two ways to get there, the numerator and the denominator. We think more of the improvement will be in the numerator, i.e. parent free cash flow goes up which is the distributions from subs is obviously a numerator that we look at the most, for health of our parent credit. So we do expect growth, as we've talked about the 10% or more growth in parent free cash flow is driven by subsidiary distributions. So it's more the reducing debt and interest cost is a smaller part of the story, but it is part of the story. So I think just going back to what I said to Julien, I think we'll do $200 million this year. I think as we see it now, probably do $100 million each of the next two years. And that's consistent I think, with what we said over the last 6 to 12 months which is about $100 million to $200 million a year. It's also pretty consistent with what we did last year. If you look at the debt we paid down, some of it was attributable to asset sale proceeds. But about $150 million, $175 million was attributable to -- in our minds, just paying down debt and trying to continue to advance our credit story. And once again, we think that we can get investment grade type stats over, let's call it 4 to five-year period, on a gradual step. I think we're -- the facts and the pathway is pretty consistent. I think it's more of a focus let's say, certainly senior management, also at the Board level, because we certainly are paying out…

Chris, what I would add, is just to remind everybody, I think our debt is in very good shape. I think Tom and his team have done a great job. At the parent side, we only have $180 million of maturities at the parent and that's in 2018. So we have no maturities at the parent this year or next. And at the subs, 95% of the debt and the functional currency of that business and at the parent 90% is fixed. So this is consistent with what we've been doing. I mean, we have been repositioning this debt to put ourselves in a strong position. When you, for example, you had a tightening of credit over the last couple of years in global market, it's not affecting us. So this is consistent with that philosophy. It is just that, as these new projects come on-line, where we can give more guidance, in terms of the strengthening of our credit into the next couple of years.

And then, my follow-up is on the overall outlook for 2016 to 2018. Obviously, Forex and commodities have hit you guys pretty hard. And you also mentioned a reduced outlook for demand growth in Brazil on the utility side, as weighing on your outlook versus the last update. Are there any other drivers there, that we should think about better meaningful in the aggregate?

No. I mean, those are the drivers. As we said, it's commodity prices, it's oil, it's gas, it's FX and it's growth in Brazil. And quite frankly other than Brazil, all of our other markets are growing. Argentina could be flat this year, but we expect a good growth in Argentina 2017 and 2018.

Our next question will come from Angie Storozynski of Macquarie. Please go ahead.

I wanted to go back to Brazil. I recall during the EEI, you guys mentioned that you seem to have a pretty significant hydro exposure in the country, both on the TSS side and the utility side. Tiete does have some debt capacity. We seem to be heading to a potential asset sale by other market participants. Do you think it would make sense for you to bulk up on your generation assets on the hydro assets in Brazil or in South America in general? Or would you rather be more conservative and just continue to return cash to investors and not to double-down, especially in Brazil?

I would say that, thinking about the other people selling some assets in Brazil, we really aren't looking at something -- like a large acquisition in Brazil. I can say that, no, we would take a more conservative position on that. And you are also right, that one of the risks, we want to measure and control really of course, is hydrology in Brazil. We have changed our contracting structure. There's a lot of water this year in South and south east of Brazil, so that spectre of rationing is gone, also with the drop in demand. We've also fortunately I think, had done a good job, the team has done a good job in terms of contracting at Tiete over the next couple of years. So we have prices around 150 reais, 149 reais per megawatt hour and the spot market, because of all the rain and the drop in demand is as low as 30 to 40 reais. So we're in a good position there. But answering your questions, strategically we do not see doing a large -- sort of doubling up as you put it, on hydro risk in Brazil.

Okay. And now a different topic, Ohio. So you've just filed your ESP. Similar to all the other utilities you're asking for a PPA for your Ohio coal plants. Now we're likely to have a FERC review of those PPAs with the other players. Now what is your expectation of -- about the future of these assets, if FERC were to somehow challenge the PPAs of the remaining two companies? Would you expect, for instance, Ohio to potentially fully re-regulate its power market?

Yes, Angie, it's Tom. I'd say what we filed in Ohio was a reliability rider, so we're thinking about it from a different perspective than a couple of the other in-state folks. So we would be less focused on their situations at this point. We just filed it. It's generally, obviously, something we'll would expect to get resolved this year. We think it hits the points that I mentioned in my script. It's consistent with the PCO criteria and objectives. It would provide stability for a long period of time and we also think it would provide benefits to rate payers over the 10 year period. The numbers are slightly -- what we filed for is slightly better, than our -- than what we have now in our ESP. I'd say, we'd incorporate something into our guidance, but I'd rather stay away from specifics of what has been incorporated in our guidance. But we do think the plants continue to have an economic value and that is certainly for the 10 year period. And it's based just on the four -- on our coal plants which is about $1 billion of rate base.

Our next question will come from Stephen Byrd of Morgan Stanley. Please go ahead.

I wanted to discuss trends, in terms of where AES parent is receiving distributions from its subsidiaries in 2015 and beyond? Could you talk to the trends in terms of changes over time, relative to what we saw in 2015, in terms of where the cash actually came from?

I'll go ahead and pass that over to Tom. But basically our big contributors are Andes and U.S., have been our big contributors. Asia growing somewhat, because as Mong Duong comes on. But Tom, perhaps you can give a more specific answer?

Yes, Steve, how are you? We got some detail in the back of our deck in the appendix. I think 46 has some detail and there's also some more -- that's by SBU. In general, I think our distributions follow our largest areas. It's the U.S., as well as Andes. MCAC was a big contributor last year, especially with the collection catch-up in the Dominican Republic that we spoke about. And I think that over time, distributions generally follow proportional free cash flow and earnings. There may be some timing off by year. Often our companies will pay out dividends based on prior year's earnings, so sometimes there's a lag of a bit. But I think generally, our distributions are quite close to proportional free cash flow, in PTC.

Steve, the one thing we maybe -- if we had the full collection from Bulgaria, this would be an upside, because we only include a modest amount of money from Bulgaria and so, we've taken a conservative approach regarding. And as Tom mentioned, recent developments have been very encouraging in Bulgaria.

So if BEH is able affect the financing and you are paid as you should be, then there could be further upside in 2016 in terms of distributions?

That's correct. That's correct, in terms of parent free cash flow, yes

Okay. And I presume you don't want to lay out exactly the magnitude of that, at this point, in terms of the incremental?

I would say, in terms of our guidance, we'd be at the upper end of the range, for the proportional and the parent free cash flow that we'd get in Bulgaria. I would mention that, in terms of encouraging news, the Minister of Energy yesterday came out and said, that they had -- there are two phases to it. The first is, that the BEH, Bulgarian Energy Holdings would receive a bridge loan from banks for later on take-out. As she mentioned yesterday, that they had received significant offers from one of the bank consortiums -- I think expect two or three to come in. And that's very favorable, because we'd get paid with the bridge loan and we wouldn't have to wait for the bond operation. So that really, again that's a favorable development. Let's wait and see. If that does occur, that would -- and given that everything else happens as we expect, we would be at the upper end of the range.

Just wanted to follow up, shift over to Latin America and just get your sense at a high level of buyer appetite, ability to finance acquisitions, et cetera, for I guess, Latin America overall and Brazil in particular, is it your sense that there is a viable buyer universe out there or is it a little challenging, given what we're seeing in terms of deterioration in places like Brazil? What's your sense?

I would really segment Brazil, from the rest of Latin America right now. I would say that Brazil is in a recession. But if you look at the rest of Latin America, its growth rates are actually higher than the U.S. So if you look at Columbia, Chile, Mexico -- Panama is growing at I think about 7%. Dominican Republic is growing, so I would segment Brazil from the rest. So for the rest, I think in most places, yes, there definitely is a market. Even in a place like Argentina, we're seeing greater investor interest, because a lot of the moves that the government has taken, are seen very favorably. I personally was down in Argentina. I can say, it's one of the most impressive executive teams I've seen anywhere, anytime. So they've already started to liberalize tariffs and rationalize prices. But if you get to Brazil itself, I think that these assets are definitely sellable. I think it depends on the asset. There is still appetite. There is still local groups who have the capacity to buy this. There is still a lot of plays of consolidation in the sector and you have foreign investors. You have Italians, Spanish investors, who are on the look-out -- and French who are on the look-out for assets. So I would say that even though Brazil is the market that's not growing and at the same time I think for quality assets, there are definitely buyers. The price may not be what it was two years ago for sure, but again, that's reflected in market valuations.

Our next question will come from Gregg Orrill from Barclays. Please go ahead.

Just to follow-up on the Bulgaria discussion, what's in your 2016 earnings guidance from Bulgaria?

Yes, 2016 has an expectation that we settle here in the near term which would be our 14% reduction in tariff. So just from a PTC perspective and the PTC for the year is about $90 million to $100 million which is a little bit down from last year. I think last year, PTC was around[$115 million, $120 million. So it's a little bit down this year. Just from a pure PTC perspective, actually delay in the resolution payment and closing of our PPA adjustment helps PTC. Obviously, a top priority is to get that done -- which gets us on the right path forward and obviously helps proportional free cash flow and parent free cash flow, but bottom line this year it's about[$90 million, $95 million PTC

So is the read that you feel your cash flow assumption is conservative?

I'd say in that respect, yes, our proportional free cash flow assumption would be conservative. It's a fairly modest amount that we have included, if you look at our mid-point, would be a fairly modest Bulgaria amount. So yes, if that gets done and Andres gave some color that the signs are certainly turning towards the positive here. If that gets done, then we could well be towards the higher end of our proportional free cash flow range.

Ladies and gentlemen, this will conclude our question and answer session. I would like to turn the conference back over to Ahmed Pasha for any closing remarks.

Thank you, everybody for joining us on today's call. As always, the IR team will be available to answer any questions you have. Thank you and have a nice day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.