Good day, and welcome to the AES Corporation Quarter One Financial Review Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions [Operator Instructions]. Also please note that this event is being recorded. I would now like to turn the conference over to Ahmed Pasha, Vice President of Investor Relations. Please go ahead.

Thank you, Ryan. Good morning and welcome to AES’s First Quarter 2017 Financial Review Call. Our press 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 Andrés 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 Andrés. Andrés Gluski: Good morning, everyone, and thank you for joining our first quarter 2017 financial review call. Today, I will discuss our financial results and provide updates on our strategy to deliver attractive risk-adjusted returns to our shareholders. Since our most recent call in late February, we have made significant progress on a number of key objectives for 2017. We advanced our construction program, which will be the major contributor to our cash flow and earnings growth over the next four years. We capitalized on our existing platforms to further enhance future growth by targeting long-term US dollar-denominated contracts. We have taken steps to decrease our covenant intensity and merchant exposure. These steps will reduce our financial and operational risk. We continued our efforts to strengthen our credit profile by prepaying $300 million of Parent debt. This also increases Parent free cash flow by lowering interest expense. We are on track to achieve our $400 million per year cost reduction and revenue enhancement program. I will discuss these achievements in more detail in a moment, but first I would like to summarize our financial results on Slide 4. In the first quarter, we earned $0.17…

Thanks Andrés, and good morning. Today, I will review our first quarter results and 2017 capital allocation. Overall, we had a solid quarter benefiting from higher margins at many of our SBUs and lower tax rates. We also generated strong free cash flow and made good progress on Parent debt reduction. Turning to adjusted EPS on Slide 19, first quarter results of $0.17, a $0.02 increase from 2016. The increase was primarily driven by the tax rate, which was lower than first quarter 2016 rate, but higher than our expectation for full year 2017. Operations were relatively steady as benefit from a legal settlement in Brazil and foreign currency appreciation were largely offset by lower contributions at DPL in Ohio. Before moving on, I want to touch on $168 million impairment charges again this quarter that are not included in adjusted EPS. Almost all of this is related to the exit of merchant coal assets that Andrés mentioned namely, the 1.7 gigawatt sale in Kazakhstan and the planned shutdown of our 1.2 gigawatt Killen and Stuart plants at DPL in Ohio. Now to Slide 20 and our consolidated free cash flow and adjusted PTC. We generated $546 million of consolidated free cash flow, an increase of $56 million from the first quarter of 2016. That was also largely driven by higher margins, as well as lower tax payments in Andes and MCAC SBUs. We also earned $190 million in adjusted PTC during the quarter, an increase of $5 million largely driven by higher margins. Now I’ll cover SBUs in more detail over the next six slides, beginning on slide 21. In the US, our results reflects slightly lower margins primarily due to the impact of major planned maintenance at Hawaii and lower contributions from DPL due to lower regulated ESP…

[Operator Instructions] Our first question today comes from Ali Agha with SunTrust. Please go ahead.

Thank you, good morning. Andrés Gluski: Good morning, Ali.

Good morning, Andrés. First, just a housekeeping item, perhaps Tom, you had a 41% effective tax rate in the first quarter, are you still targeting 31% to 33% for the year? Any reason why Q1 was so much higher than that?

Yes, we are still targeting 31% to 33%, first quarter was just the timing of certain events, but 31% to 33% is still what we expect to be for the year.

I see. And then, second on the asset sale front, the $500 million target that you have for the year, the Ohio sale of $50 million and this Kazakhstan sale of $24 million, do they count against that or are they separate from that? And related to that, in the past, you told us that you resumed about a $0.03 earnings dilution from the asset sale primarily from the timing. Given your comments that the timing maybe later in the year, is that $0.03 dilution still valid for 2017?

So, Ali, as we talk about asset sales proceeds, those are – that’s cash to corp. So the DPL money will all be used within DPL to retire debt, so that would not count into that. The Kazakhstan $24 million would, and yes, you are right, we had said $0.03 to $0.04 from dilution. We now expect that to be later in the year some maybe $0.02 or somewhat less. That will be a bit of a help from a timing perspective.

Okay, and thirdly, in terms of mapping out your full year growth profile and as you point out, there is a fair amount of free cash flow that you’ll generate over that period as well. Can you remind us for the cash that’s unallocated at this point, what kind of return are you assuming on that cash that kind of gets you to that 8% to 10% overall annual growth rate CAGR?

Yes, we are assuming cash in the – cash return in the high-single digits on that, which is consistent with our – at the lower end of our return on investments that obviously we could look at other things such as paying down debt or repurchasing stock.

Okay, and last question, on the Colon project, with this ENGIE LNG contract, does that change your expected economics, the ROE that you resumed on that plant or was this already factored in into your overall ROE for that project?

Yes, Ali, we have assumed quite – say modest use of the tank in regasification facility in our numbers. So to the extent that we can use, make more use of what’s basically existing capacity in the tank and in the terminal, that will be upside. So, with ENGIE in the Dominican Republic where we are using about 50% of the tank’s capacity, and in the Panama where we had basically 25% of the tank’s capacity being used, the sooner we fill this up, the better it will be. What is the upside potential? Well, if we utilize all of the existing tanks, say, by 2020 and 2021, that’s between – depends a little bit on the timing, but somewhere between, say $0.03 and $0.05 of upside. Furthermore, we have the land that we could – and capacity at the terminals that we could, in each location build the second tank and that would be further upside potential. So we are very excited about this opportunity. We’ve been quite successful on our own selling gas in the Dominican Republic for transportation and for industry. We’ve done our first shipments in thermal tanks or really containers of LNG to other, another island in the Caribbean. So this is an upside. We see that in the future, certainly ship bunkering will be important. We also see again more conversion of plants, industry, transportation in the Caribbean and in Central America. And with a strong partner like ENGIE that can provide structured products to offtakers, we are very well positioned, but we are just starting and that’s why we have very modest assumptions in our numbers.

Understood. Thank you.

Our next question today comes from Julien Dumoulin-Smith with UBS. Please go ahead.

Hey, good morning. Andrés Gluski: Good morning, Julien.

So, quick couple of questions here to follow-up. First on the SG&A reductions, you announced sort of an acceleration. Is that already reflected in your guidance as you see it for this year, and just to clarify that? And then separate, just the distinction, as you think about the 2018 uplift of $0.20 you discussed, can you discuss some of the other puts and takes? I am curious as to what the net EPS impact is of the divestment and/or sale, and the retirement of the DPL asset? Andrés Gluski: Okay, let me take the first one. In terms of the first, this is what we have announced before, I mean, I think we’ve delivered, actually more than delivered every year in terms of the guidance we set out. So what we are saying is we feel very comfortable with the $50 million that we announced and is in our guidance for 2017, and an additional $50 million in 2018 and last time we also announced that we – that program will continue -- this sort of productivity improvements will continue in 2019 and 2020 although somewhat at a decelerated pace. So, basically, this is just a reaffirmation of what we announced before. Now on the – sorry, the second question is in terms of, when you are talking about the dilution from the sale of the DP&L assets.

Yes, I was thinking, sorry, go for it. Andrés Gluski: Yes, Julien it’s probably couple of things when you look at DPL it’s probably about a penny and obviously it depends upon terms et cetera. But maybe it’s about a penny in terms of the – what we are looking at, but that was all contemplated when we gave our guidance in February. I would say on a cash flow basis, DPL will be pretty neutrally cash flow EBITDA minus CapEx is pretty much breakeven as we see it through our forecast period even before other indirect costs.

Got it, excellent, and then can I just clarify, because I thought I heard you talk about an acceleration in SG&A. How does the classes of European and Asian business together fit within the context of SG&A? Is that still part of the 50 or is that actually going to potentially see some more of that 100 biased toward the 70? Andrés Gluski: No, Julien, that is part of the 50 for this year and part of the 100 for the end of next year. So we will continue to take steps, obviously as we divest those assets, that also helps us to accelerate this process.

Got it. And to clarify for 2018, you talk about $0.20 of uplift, obviously DPL is not a huge impact there in terms of offsets. What are some of the other known factors that we should just be aware of it, if you will? Andrés Gluski: Well, I think, what Tom and I said, I mean, the main is our construction program. So we had three CCGTs that will be online in 2018 we have the cost-cutting program that we have announced and we’ve had the continued delevering. So those are the three main items that are going to contribute to the increase in our earnings and cash flow in 2018.

Right, absolutely any other offsets there, so the $0.20 contemplates the construction program and doesn’t include the cost-cutting? Andrés Gluski: Yes, it does. It includes all.

Okay, okay. So that’s a net number year-over-year inclusive of balance sheet SG&A and net contract degradation against growth? Andrés Gluski: Yes, that’s correct. And like all of our numbers, that’s based on currency and commodities, forward curves as of today.

Right, excellent, all right. I’ll leave it there. Thank you all very much.

Our next question comes from Greg Gordon with Evercore ISI. Please go ahead.

Thanks, Good morning. Andrés Gluski: Good morning, Greg.

I think most of this – most of my questions have been asked, but what I am looking at slide 53, and I am comparing it to your capital allocation slide. Your investments in subsidiaries is up $100 million versus the Q4 disclosure and it looks like your investment in Alto Maipo is up from $335 million of AES equity to $413 million. So that looks like it represents the majority of that increase. Am I correlating that correctly? And if so, does that in fact – taking into account the cost overrun or not because the footnotes still says it excludes the cost overrun.

Yes that does take into account. The full 20% cost overrun in Alto Maipo.

Okay, so that – so the footnote should have been excluded then starts it’s kind of a typo?

Well, it’s an additional 100 in 2017 from Gener and we own 67% of Gener. Most of the financing again is coming from the lender and the minority partner.

No, I understand that. I am just asking a very simple question. In the Q4 deck you have $335 million invested, but the footnote saying excluding the overrun. Andrés Gluski: Greg you are right. This includes the cost overruns. So there is a typo there, as you mentioned.

Okay, so that typo should have been removed. Great, I just wanted to clarify that. Thank you. And then – but overall…

Greg, it’s Tom. First off, it’s impressive you saw the typo on Page 53. But just going back to your first question on the up 100, you are right in terms of investment subs. It’s in smaller pieces, we do have a modest acceleration of our investment in Colon from 2018 to 2017, so it’s a part of it and then the other large part is an investment in renewable including sPower. That’s the biggest of the diff in that 100.

Okay, great. So, we’ve got Alto Maipo, Colon and sPower and that represents the change?

Yes, Alto Maipo is very modest for this year, because A, it’s funded by Gener, lower dividends, but it’s really not factoring into that, because it’s funded by Gener and it’s funded over the next couple of years.

Okay, I understand. Okay, so, when I am looking at Page 53 versus this year’s capital allocation, 53 is total not just this year, it’s happening over a period of time, that’s the difference.

Correct.

Okay, got you, perfect. And then also your – it looks like your total cash flow over the 2020 period, you’ve raised at the midpoint by about $100 million. Is that just because you’re accelerating debt reduction and retaining more cash from interest savings or is it a combination of other small things?

Yes, combination of small things. Andrés Gluski: Yes, probably, maybe just rounding.

Yes.

Okay, thanks guys.

Next question today comes from Chris Morgan with Macquarie. Please go ahead.

Hey guys, it’s actually Angie Storozynski. So, I didn’t hear any comments about Brazil. Could you say about – anything about economic recovery and the future of your utility there? Thank you. Andrés Gluski: Sure, hi, Angie. In Brazil, what we are seeing is, last quarter, we saw flattening of the decline and this year we might seeing a slight pickup in demand. But, more like 1% demand has decreased like 10%. So, overall, we are modestly optimistic about Brazil. The President is taking a number – on a number of the important reforms that it flow through, going very well for the country, but we expect a gradual slow recovery in Brazil. Now this year, they are having a drought and as Tom mentioned, I think, it’s a good example of how our change in commercial strategy and the level of contracting that we have had made it, quite frankly a very small issue, where two years ago it was a very big issue for us. And so, it’s basically the same asset I should say, but it makes a very big difference. So, with the acquisition of the wins that will help provide Tietê with basically assets which are not correlated with hydrology which are contracted at 18 years at good prices. Now regarding our utility, which is Eletropaulo and remember we sold, Sul. What we are doing is moving forward on listing it on Novo Mercado and that is going well. And so basically, being on the Novo Mercado means, one share one vote and therefore we would no longer consolidate Eletropaulo in our numbers. Now the company has had a significant recovery in its share price this year and it’s continuing to make improvements operationally.

Okay, and then, in Chile, so, thanks for the update on the construction progress on Alto Maipo. Is there – have you managed to secure anymore contracts for this asset? And also any indication on pricing for power, especially ahead of the next forward power auction? Andrés Gluski: We have not secured anymore contracts for Alto Maipo at this stage. It’s part of the Gener portfolio. So, they have basically the Gener, it’s highly contracted through 2021, 2023. So we don’t have any immediate issues at Gener. I mean, last year was a record year for Gener, both on earnings and cash flow. This year is also looking extremely good. So, what we are seeing, again, as re-contracting rates passes that window, what we’ve seen on the – we have signed some new contracts, especially one of our subsidies of Gener which is Guacolda and these were rates around 70. But we continue to see sort of a long run price in the sort of mid $60 per megawatt hour and that’s without assuming any sort of rebound in mining activity or more rapid growth of the economy. Chile is growing about 2%, 2.5% and traditionally it’s been growing more sort of at 4%, 5%. So we have a pickup in economic activity. We think these prices could improve further.

Okay, thank you.

Our next question comes from Lasan Johong with Auvila Research Consulting. Please go ahead.

Thank you. I wanted to ask a strategic question in a sense that, what – is it going to stay 2.5 to 3 gigawatts of new construction projects per year would jump your growth rates from around 10% to 20% a year? Andrés Gluski: That will depend a little bit on – to what extent we have partnerships in those deals. This year, with the acquisition of sPower and some of the new things we’ve commissioned, we’ll be close to that number in terms of new projects and acquisitions. So, but it will depend on how much of those projects we own and whether it’s 50%, whether it’s 80%. We continue to plan to basically include partners on most of our big projects.

That makes sense and I am moving in. So, in terms of discretionary cash flow, you guys have about $1.4 billion through 2020. And right now, to what - less than over $400 million has been dedicated to new projects. So, if all of that remaining discretionary cash flow to be used for growth projects, is it correct to assume that you can reach that 20% type compound annual growth rate?

No, that seems awfully high, quite frankly, no. One thing is very important, we will continue to be very disciplined in terms of our capital allocation and we were committed to growing the dividend, reaching investment-grade and continuing to decrease our risk on this portfolio from all factors. So, that seems high. I mean, to get there, I mean if you had some dramatic improvements in some of the economies and commodity prices, perhaps, but we do have significant upside as I mentioned on LNG and which we’ve quantified. And on energy storage, we are continuing to work on that. We are making good progress and when we feel confident that we can provide some numbers, we will do so. But, again, this is our plan. We will be disciplined and ensure that when we grow, it’s profitable growth. And all of our growth has to come on to our platform really has to – we have to be able to provide synergies or economies of scale or something like that before we do an acquisition.

So, just a little clear, the $1.4 billion would not get you to the 20% growth rate?

Probably, not, I mean, of course it really isn’t our goal. So what’s more important for us is to be disciplined, decrease risk and hit those – grow our dividend and improve our credit metrics. So, with that in mind, I don’t see it quite frankly.

Okay, then the flip side of the question is, once you get to a position where you think your risk is lowering off and the debt payments have gotten you to an investment-grade credit metric, what is going to be y our forward-looking strategy from that point on? Is it going to be more constrained on growth? Is it going to be maintaining the ship on course? How would you change that strategy? Andrés Gluski: Well, when I think of the new strategy that we announced, based on the prior five year strategy, it would be an evolution of it. We think that the key elements are really having platforms, integrating renewable with existing capacity from thermal and hydro. And also being a leader in new technology. So, we are all about three months into the new strategy and we will update you next time.

Okay, fair enough. Thank you, Andrés. Andrés Gluski: Thank you, Lasan.

The next today comes from Charles Fishman with Morningstar. Please go ahead.

Thank you, and good morning. Yes, I had the same question, Greg did about the $100 million. But I can assure you I never would have seen the footnote error on Slide 53. Here is my other question that I got left. Andres, you talked on Slide 6, Alto Maipo, the problem is the tunnel. And tunnel on these type of projects can be certainly – you are not the first to experience tunneling challenges. Of the 52% complete right now, what percent of the tunnel is complete? Or is that – are you talking about the tunnels? Is that the main part of the project or how should we look at that? Andrés Gluski: That’s a very perceptive question. It’s 52% complete that includes all of the works and all of the equipment. On that tunneling we are more than a third complete on the tunneling. And basically what happened here is that the rock ended up being a less crusted than all of our projections and that’s what’s really slowed us down, because when you have to do more reinforcements you have to go more slowly and it was a bit surprising, because this is an expansion of an existing facility Alfalfal. So it’s in the same mountain. It reterminates some of the same water. But that is what it is and as you are right, we are not the first to have encountered a different lock and what was expected once you start tunneling.

Okay, and then on Slide 6, I assume, that’s a tunnel boring machine we are looking at, is that the machine that’s actually in there now working? Andrés Gluski: That’s exactly right. We have three of them in operation now, three TBMs and a fourth one on order that’s coming down. So we will have four TBMs operating on this site

Okay, so your – because it sounds like you are accelerating the thing to get it done. Okay, good. That was the only question I had left, Andres. Thank you. Andrés Gluski: Okay, thank you.

And we have our last question today coming from Gregg Orrill with Barclays. Please go ahead.

Yes, thank you. Can you walk through the details around the EBITDA guidance reduction for DP&L? I think it was obviously, you sold some of the generation assets, but it looks like it was down around $60 million from the fourth quarter?

Yes, so, I think, what you are referring to is about $50 million drop, I mean, part of this is, as you know, Gregg, we have announced the sale of our coal-fired generation that accounts for about $30 million to $40 million. The total shutdown plus sale and then we also have incorporated updated non-bypassable, which is now $105 million versus what we were expecting, which was slightly higher than that. So net-net, I think that is – that accounts for most of the change.

Okay, thanks.

This concludes our question and answers session. I would like to turn the conference back over to Ahmed Pasha for any closing remarks.

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

Ladies and gentlemen, the conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.