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The AES Corporation’s (AES - Free Report) second-quarter 2016 adjusted earnings per share of 17 cents missed the Zacks Consensus Estimate of 18 cents. Quarterly earnings also plunged 24.6% from the year-ago level of 26 cents per share.
The company’s earnings declined primarily due to lower margins. This was mainly due to lower contributions from its Strategic Business Units (SBUs), Brazil and Mexico, Central America and Caribbean (“MCAC”), and the devaluation of foreign currencies.
AES Corp. generated total revenue of $3,229 million in the second quarter, down 11.7% year over year due to lower contribution from both the regulated and non-regulated businesses.
In the reported quarter, total cost of sales was $2,655 million, down 8.5% year over year. General and administrative expenses were $47 million, lower than the year-ago level of $50 million. Operating income was down 24% to $574 million. Operating margin was 17.8%, down 290 basis points from 20.7% a year ago.
Interest expenses in the quarter were $390 million, up from $287 million in the year-ago period.
Financial Condition
AES Corp. reported cash and cash equivalents of $1,265 million as of Jun 30, 2016, compared with $1,257 million as of Dec 31, 2015. Non-recourse debt was $14,261 million as of Jun 30, 2016, up from $12,943 million as of Dec 31, 2015.
In the first half of 2016, cash from operating activities was $1,363 million, compared with $590 million a year ago. Total capital expenditure in the period was $1,342 million, higher than $1,252 million a year ago.
Proportional free cash flow, a non-GAAP measure, was $670 million in the second quarter, up from $327 million in the year-ago period.
Guidance
AES Corp. reaffirmed its adjusted earnings per share guidance for 2016 in the range of 95 cents to $1.05.
The company also reiterated its 2016 proportional free cash flow guidance in the range of $1,000 million to $1,350 million.
Peer Releases
DTE Energy Company (DTE - Free Report) reported second-quarter 2016 operating earnings per share of 98 cents, beating the Zacks Consensus Estimate of 90 cents by 8.9%. Reported earnings were also up 28.9% from the year-ago figure of 76 cents per share.
PG&E Corporation’s (PCG - Free Report) adjusted operating earnings per share of 66 cents in the second quarter of 2016 lagged the Zacks Consensus Estimate of 94 cents by 29.8%. Earnings also declined 27.5% from 91 cents per share reported in the year-ago quarter.
Public Service Enterprise Group Inc. (PEG - Free Report) reported second-quarter 2016 operating earnings of 57 cents per share, in line with both the Zacks Consensus Estimate and the year-ago figure. On a GAAP basis, quarterly earnings were 37 cents per share, down from 68 cents a year ago.
Zacks Rank
AES Corp. currently carries a Zacks Rank #3 (Hold).
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AES Corp (AES) Lags Q2 Earnings Estimates, Margins Hurt
The AES Corporation’s (AES - Free Report) second-quarter 2016 adjusted earnings per share of 17 cents missed the Zacks Consensus Estimate of 18 cents. Quarterly earnings also plunged 24.6% from the year-ago level of 26 cents per share.
The company’s earnings declined primarily due to lower margins. This was mainly due to lower contributions from its Strategic Business Units (SBUs), Brazil and Mexico, Central America and Caribbean (“MCAC”), and the devaluation of foreign currencies.
Highlights of the Release
AES Corp. generated total revenue of $3,229 million in the second quarter, down 11.7% year over year due to lower contribution from both the regulated and non-regulated businesses.
In the reported quarter, total cost of sales was $2,655 million, down 8.5% year over year. General and administrative expenses were $47 million, lower than the year-ago level of $50 million. Operating income was down 24% to $574 million. Operating margin was 17.8%, down 290 basis points from 20.7% a year ago.
Interest expenses in the quarter were $390 million, up from $287 million in the year-ago period.
Financial Condition
AES Corp. reported cash and cash equivalents of $1,265 million as of Jun 30, 2016, compared with $1,257 million as of Dec 31, 2015. Non-recourse debt was $14,261 million as of Jun 30, 2016, up from $12,943 million as of Dec 31, 2015.
In the first half of 2016, cash from operating activities was $1,363 million, compared with $590 million a year ago. Total capital expenditure in the period was $1,342 million, higher than $1,252 million a year ago.
Proportional free cash flow, a non-GAAP measure, was $670 million in the second quarter, up from $327 million in the year-ago period.
Guidance
AES Corp. reaffirmed its adjusted earnings per share guidance for 2016 in the range of 95 cents to $1.05.
The company also reiterated its 2016 proportional free cash flow guidance in the range of $1,000 million to $1,350 million.
Peer Releases
DTE Energy Company (DTE - Free Report) reported second-quarter 2016 operating earnings per share of 98 cents, beating the Zacks Consensus Estimate of 90 cents by 8.9%. Reported earnings were also up 28.9% from the year-ago figure of 76 cents per share.
PG&E Corporation’s (PCG - Free Report) adjusted operating earnings per share of 66 cents in the second quarter of 2016 lagged the Zacks Consensus Estimate of 94 cents by 29.8%. Earnings also declined 27.5% from 91 cents per share reported in the year-ago quarter.
Public Service Enterprise Group Inc. (PEG - Free Report) reported second-quarter 2016 operating earnings of 57 cents per share, in line with both the Zacks Consensus Estimate and the year-ago figure. On a GAAP basis, quarterly earnings were 37 cents per share, down from 68 cents a year ago.
Zacks Rank
AES Corp. currently carries a Zacks Rank #3 (Hold).
AES CORP Price, Consensus and EPS Surprise
AES CORP Price, Consensus and EPS Surprise | AES CORP Quote
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