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AES Corp Misses Earnings

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The AES Corporation (AES - Free Report) reported first quarter 2013 adjusted earnings per share of 26 cents, below the Zacks Consensus Estimate of 28 cents. Adjusted earnings for the reported quarter also decreased 29.7% from the year-ago figure of 37 cents.

On a GAAP basis, the company reported earnings of 14 cents compared with 44 cents in the year-ago quarter. The 12-cent variance between adjusted and GAAP earnings came from a 1 cent and 4 cents charge related to unrealized derivative and debt retirement losses, respectively. It also included a 5 cents loss from impairments and a 2 cents loss from foreign currency transaction.

The company realized lower numbers across all its business units barring the U.S.


In the reported quarter, revenues were $4,265.0 million, failing to match our projection of $5,197.0 million by 17.9% and also declined almost 7.0% from the year-ago quarterly revenues of $4,586.0 million.

Lower revenue recognition across all its segments, except MCAC (Mexico, Central America and the Caribbean), led to the lower numbers.

Operating Highlights

In the reported quarter, total cost of sales was $3,510.0 million compared with $3,514.0 million in the first quarter 2012. This marginal decrease was mainly due to a 7.9% cut in regulated sales costs.

General and administrative expenses declined to $61.0 million from $87.0 million in the year-ago quarter level.

Operating income stood at $299.0 million, down 61% from $769.0 million in the same period last year. Although the company managed to control its costs, a lower top line led to a fall in profit in the reported quarter.

Interest expense was $377.0 million versus $416.0 million in the first quarter 2012.

Financial Condition

AES Corporation reported cash and cash equivalents of $2,301.0 million as of Mar 31, 2013 versus $1,966.0 million as of Dec 31, 2012.

The company generated $618.0 million in cash from operating activities at the end of the first quarter compared with $534.0 million in the year-ago period.

Long-term liabilities as of Mar 31, 2013 decreased to $25.6 billion from $25.9 billion as of Dec 31, 2012.


AES Corporation reaffirmed its adjusted earnings guidance for 2013 in the range of $1.24 to $1.32 per share. The company maintained its 2012-2015 total return target in the band of 6% to 8%. Proportionate free cash flow is estimated in the range of $750.0 million to $1,050.0 million in 2013. Cash flow from operating activities for 2013 is projected to be between $2,500.0 million and $3,100.0 million.

Other Utility Company Releases

Mich.-based CMS Energy Corporation (CMS - Free Report) announced first-quarter 2013 earnings per share of 53 cents on both adjusted and GAAP basis, beating the Zacks Consensus Estimate of 46 cents. Earnings were also 43.2% higher than 37 cents earned in the year-ago quarter. A colder-than-normal weather spiked natural gas deliveries, driving better-than-expected results in the reported quarter.

American Electric Power Company Inc.’s (AEP - Free Report) first quarter 2013 adjusted earnings of 80 cents per share came in line with the Zacks Consensus Estimate as well as the year-ago profit. The company witnessed solid residential and commercial sales during the quarter, stemming from positive regulated rate recovery. However, this was partly offset by weak industrial sales.

ALLETE Inc. (ALE - Free Report) reported first quarter 2013 earnings of 83 cents per share compared with 66 cents per share in the year-ago quarter. ALLETE’s earnings beat the Zacks Consensus Estimate by 10.6%. Earnings received a boost from increased electric sales due to a cold winter, start-up of renewable services and higher returns from investments in American Transmission Company.

Zacks Rank

AES Corporation currently retains a Zacks Rank #3 (Hold). American Electric and ALLETE carry a Zacks Rank #2 (Buy), while CMS Energy carries a Zacks Rank #1 (Strong Buy) and are worth buying now.

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