Good morning, and welcome to the Fourth Quarter and Full-Year 2016 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]. Please note that this event is being recorded. I would now like to turn the conference over to Ahmed Pasha, Vice President, Investor Relations. Please go ahead.

Thank you, Daniel. Good morning and welcome to AES’s fourth quarter and full-year 2016 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? Andrés Gluski: Good morning, everyone, and thank you for joining our fourth quarter and full-year 2016 financial review call. This morning we will discuss our results and our financial outlook. We will update you on key trends we’re seeing across our markets and the progress we’re making on our construction program and long-term strategy, including our recent announcement that we have agreed to acquire sPower, the largest independent solar developer in the United States. The key takeaway for today’s call include, we delivered on our 2016 financial guidance; we’re seeing positive developments across our businesses in markets; we are on track to achieve our run rate of $350 million in cost savings and revenue enhancements through 2018; notably, we’re expanding this program by targeting an additional $25 million of annual savings in 2019 ramping up to a $50 million incremental run rate in 2020. Despite some challenges we are facing on a 3.4 gigawatt construction program, we expect to complete these projects through 2019. We exited non-core assets to bring $500 million in proceeds to AES that we will reinvest to continue to deliver sustainable long-term growth to our shareholders. We signed…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Ali Agha with SunTrust. Please go ahead.

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

First question Andrés or Tom, just to clarify the dilution that you’re seeing in 2017 in your guidance that $0.03 to $0.04. I’m hearing you right, you are saying that’s a timing issue in terms of when the proceeds are invested, so when – you do end up investing those proceeds, let’s call it in 2018, is the ultimate impact neutral, accretive or still dilutive, how should we think about this? Andrés Gluski: You’re right, it’s $0.03 to $0.04 and it’s really a timing impact. We think that the effect should be probably about neutral, be very minimal. Of course it will ultimately depend exactly on the transaction that we invest, but you know I wouldn’t expect it to be strongly you know certainly dilutive.

Okay. And then also clarifying, Tom, the profile that you were laying out to us, as you mentioned at the mid-point of your 2017 guidance, you are up 5%. If I’m hearing you right, in 2018 you should be up like 12% over 2017, if I heard that right? And then should we assume fairly even growth in 2019, 2020 as part of your profile? Thomas O’Flynn: Yes, that’s fair.

Okay, so those two years have mapped them out consistent? Thomas O’Flynn: Yes and actually the 12%, Ali, was off of midpoint of 2016.

Is that a CAGR or is that a – I’m little confused? Thomas O’Flynn: We had previously said that we thought growth in 2016 to 2018 would be 12% to 18 – 12% to 15% EPS, so we still think that 2018 will be at the low-end of that 12 and 12 range. We obviously want to go our path then to give investors a longer profile.

Right, but that’s a CAGR we are talking, 2016 through 2018 12% CAGR. Thomas O’Flynn: Yes.

Okay, and then third question, just to understand some of the assumptions that you mapped into this longer term outlook. So I’m assuming, do we assume in there that the Ohio settlement is approved as such and kicks in with that $125 million number, is that assumed in there? And what FX moves have you assumed? Is it just looking at the forward curve in the outer years as well or some assumed dilution, what have you assumed there? Thomas O’Flynn: Yes, we assume forward curves as always. And in terms of DPL, it’s in the range – we’re in discussions, so I’d rather not be too specific, but it’s in the ballpark of what we’ve been discussing.

Okay. And then lastly, the points you made about the free cash flow usage of roughly the $1.5 billion that you’re left with. When you assume some investment in there, are you assuming the average ROE of 14% or what kind of return are you assuming on that excess cash? Thomas O’Flynn: Well, some of it’s for defined projects like [indiscernible] so we got a pretty good visibility on that, but we’re really looking across our portfolio based on – as we look at our portfolio, we look at risk and returns consistent with the country, the project etcetera. So it’ll be a range of things from 14%, down to things in the low double-digit consistent with Andrés’s comment on the sPower sales pipeline.

I see, okay, thank you.

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

Hey, good morning. Lots of things to talk about. Andrés Gluski: That’s right. Good morning, Julien.

Perhaps first just a real quick question, a couple easy ones. sPower, what kind of EPS should be assuming once that closes on annualized basis. Is it simply taking a high single digit ROE from the equity invested or because of the ITC [indiscernible] something lower than that in terms of the ongoing ROE? Thomas O’Flynn: Hey Julien, it’s Tom. It’s only a few cents a year, as Andrés said, it’s lumpy, so – but generally it’s a few cents a year. If you look at over longer period, the ROEs would line up with the IRRs. The ROEs in the early years are little better, because the nature of the accounting comes with the tax equity investments, obviously it’s bigger if we – if it’s more size – size of…

Got it, so it’s shooting above that level in the earlier, so is there kind of a – what’s embedded in 2017 guidance for instance, or as you think about 2018 with the sPower deal… Thomas O’Flynn: I think...

…[indiscernible] and also the trajectory thereafter? Thomas O’Flynn: Yes, few cents a year.

Okay, just a couple cents give or take. Thomas O’Flynn: Yeah.

Okay got it. And then moving – what’s the impact of deconsolidating Eletropaulo in EPS, just – I just want to make sure. Andrés Gluski: None. Just on that…

Okay, great. Andrés Gluski: …just on the consolidated free cash flow.

Right, and also what’s reflected in terms of DPL in your 2017 guide and onwards? Andrés Gluski: I think Tom answered that in terms of – you know basically we are not going to discuss it, but it’s within the range that’s public.

Got it. All right, fair enough. And then following on Ali’s last one, the 12% to 16% well in, so that would be roughly above 24, 12% compounded, two years off of 2016’s dollar? Thomas O’Flynn: Yes, that’s right.

Got it. And then what do you think about a normalization of the effective tax rate, 31% to 33%, how do you think about that in 2018 and onwards, just as you – more structurally. Thomas O’Flynn: Well, that’s the rates we’ve always talked about, it’s sort of in the low 30s. Obviously there is talk about tax reform in the U.S. and we’ll of course incorporate any changes there. I mean it’s a very positive thing such as territorial tax, lower rates. On the other hand there is talk about limiting interest deductibility, and so we’ll see how that washes out. So I mean basically we’re looking at – we do not believe most of the proposals in the reasonable range will have a material impact on us.

Got it. And lastly, if you can elaborate just quickly, timing on OPGC 2, just on shifts, what’s the latest status if I can? Andrés Gluski: I mean we are making very good progress on OPGC 2. We had talked about that versus the original expectations, we’re about six months behind, we haven’t lost any more time and basically the project is up and running and we’ve done the related infrastructure projects, whether it be the rail or the new housing. So that project is coming along very nicely.

Excellent. All right, I’ll leave it there. Thank you very much. Andrés Gluski: Thanks, Julien.

[Operator Instructions] Our next question comes from Stephen Byrd with Morgan Stanley. Please go ahead.

Hi, good morning. Andrés Gluski: Good morning Steve.

Thanks for the comprehensive guidance you’re looking out. I wanted to go to your Slide 33 and think about the discretionary cash bid. When you think about the targeted credit metrics that you’re looking to achieve later in the decade, can you give us a bit of color on how we should be thinking about those metrics? Thomas O’Flynn: Hey Stephen, so our ratio is now five, we think we need to get down the four range, obviously it’s dependent upon business mix, but we’ve gone from 6.5 to five and we think something in the four range would be would represent investment grade metrics. So, that will come with some parent debt reduction and also continuing growth in our parent free cash flow. Andrés Gluski: One thing I’d like to add about that also is the qualitative aspect. As we have more dollar-denominated long contracted cash flows, that is qualitative aspect, I think it’s very important. So that’s part of that evolution as well.

All fair points and it looks like you’ll have a fair amount of true discretionary cash even achieving those leverage metrics, so that’s great. And just shifting over to sPower, when we think about how you’re going to finance the growth and those returns, I assume that you laid out are levered returns. Should we be assuming that you’ll avail yourself with a typical project financed debt leverage levels which you can get? And then for the equity check, will it likely be 50-50 with your partners or should we be thinking about that differently? Andrés Gluski: Yes, you’re right. I mean, we’re thinking of 50-50 with our partner with AIMCo. I would say that in terms of you know how to finance them is a continuation of the mixes which you have now and obviously you’ll have some phasing down of the ITC, we still see that there will be appetite from financials for tax equity into these protects. One thing I’d like to stress about the acquisition of sPower is really the effect it will have on our whole portfolio and obviously we can do solar project all over our platform and we have some very attractive opportunity, especially where we can integrate them with our existing conventional plans. We think that is a very interesting product offering that sort of load following energy that can be supplied and taking into account the sort of intermittency of renewables we can offer a better product. So really with the pipeline that should be delivering between 500 and 1 gigawatt of new projects per year, this really is a – we’ll be bale to leverage this across our portfolio whether it be purchasing. And also we think that this team has been extremely successful with a very disciplined development projects, it really has a proven track record. So when we think about sPower, we think about the JV with AIMCo, which will continue to grow on a 50-50 basis. But in addition, there will be synergies, which will be beneficial to other AES projects, but also to the JV, because the more we buy and the – had those economies of scale, the JV will benefit from this as well.

That’s a great color, Andrés. And just on the pipeline what we’re talking about that it’s a huge number in terms of the potential size. Is there anyway for us to get a better sense for the degree of risk or flipped around the degree of certainty that you might have in terms of pursuing this pipeline, is it some very early stage or some quite advanced and you feel quite good about your prospects, how should we think about that, just given how big it is? Andrés Gluski: Well there is over 200 megawatts which already has PPI contracts. There is another over 200 which has, are under PPI negotiations. There are about 2 gigawatts which are platform expansions and those again have lower risk because you already have operating assets in those areas. And then the rest are various degrees of development. I would say that a lot of this rest upon sPower’s reputation and with clients which range not only from utilities, but corporate as well. So we see this is a very robust pipeline in general, and we will see how this develops over the following years, but it is more or less sort of commissioning 500 megawatts at first and it should ramp up to 1 gigawatt. Now I would say also that this is not, this is something we tried, when we acquired main stream power, which is more distributed energy smaller, but it is interesting. The main stream has done about – I believe a little bit less than 60, 70 megawatts in its entire history. Last year under AES, they did 88 megawatts, and this year it could be as high as 200 megawatts. So I think this shows how bringing in sort of AES’ financial capabilities, also our market knowledge can empower this. So, we see this as you know we tried on a much smaller scale and now we are going to a large scale.

Super, helpful. Thank you very much. That’s all I had.

Our next question comes from Angie Storozynski with Macquarie. Please go ahead.

Thank you. So wanted to talk about the guidance for free cash flow growth. I understand the dilution on the earnings impact, the diversities and their impact on the EPS CAGR, but about the cash flow CAGR, I mean that has come down a little bit, right? You had expected a 10% CAGR in proportional free cash flow, I don’t think that the controlling interest has had any impact here. Why the reduction here in growth expectations? Thomas O’Flynn: Angie, remember the 10% was through 2018. So we are doubling the period, going to 2020 and saying 8% to 10%, so it – I think it is still consistent with our general trajectory. We did use the base line as a mid-point of 2016 guidance. Remember that we got about 300 million from interest, so, in 2016 so you are not going to yet normalize for that.

Okay.

And this is Ahmed. I think the shape will be more front end loaded because we have about $1 billion of equity in our construction projects. So those projects are coming on line in the 2018, so we will see more contribution front end loaded from those investments.

Okay. Secondly on Alto Maipo, so basically you have about 300 million in cost overruns and do you agreed on financing only 22% of it, is that correct? Thomas O’Flynn: Put it this way. We have the cost overruns are expected to be in the range of 10% to 20%. We have financing that we are closing on for up to 22%. So, we would cover even the sort of worst estimate in terms of cost overruns.

Also that 22% is not of the cost overrun, it is of the entire project? Thomas O’Flynn: That’s correct. The 110% of the worst case of the cost overruns, it would be like 220% of the expected case.

Okay, fantastic. And then lastly on your EPS guidance, I mean just looking at how your CAGR – I mean that would imply about $1.40 to $143 in EPS by 2020, which is probably ahead of your prior expectation for 2020 earnings. I know that you were not giving explicit guidance, but it almost seems like there is a slower earnings growth initially and then it accelerates by – and basically exceeds expectations of prior earnings growth by 2020? That’s your assessment? Andrés Gluski: That’s correct. Yes, that’s correct.

Okay, thank you.

[Operator Instructions] Our next question comes from Keith Stanley from Wolfe Research. Please go ahead.

Hi, good morning. Do you think it’s possible that DPL to still get PUCO Staff on board to a deal here? Do you expect the case to be fully litigated at this point? Andrés Gluski: We think it’s possible to get PUCO Staff onboard, very much so.

Okay. And that would be before the March date [ph]? Andrés Gluski: Yeah, I mean, obviously, Keith, time is running out, but we continue to have an open dialogue and open door and expect something will be figured out, sir, that’s – we are certainly open to that.

Okay, great. And then at Eletropaulo – well, on the asset sales, besides Eletropaulo, I mean, do you get the $500 million, it sounds like there is some other material sales you are planning or several assets being marketed right now or at a high level how can we think about what you might be looking to sell? Andrés Gluski: Well, again, you know, these are ongoing businesses; we never talk about them before its close. But what I would say is that look at what we’ve said as our strategy, in terms of de-risking the portfolio of reducing our carbon intensity. Those are the types of assets we have sold and we will continue to sell. Obviously, with the number of $500 million, we have something specific in mind, which is advanced for us to feel confident in terms of getting this guidance, so that’s as far as I can go, but I would say that – as we’ve always said, we will continue to sort of churn our assets and invest them in better -adjusted returns.

Great, thank you.

Our next question comes from Gregg Orrill with Barclays. Please go ahead. Andrés Gluski: Good morning, Gregg.

Good morning. Can you provide a little more detail or perspective around the $0.06 reserve from the fourth quarter and then thoughts on returns around your investment in wind in Brazil? Andrés Gluski: Okay. Taking the first one, I mean, that was basically we had a legal case, which we had – let’s say the possibility of getting it funded and we did took a reserve against that, we don’t want to get into more detail about that. Certainly, a close case, there shouldn’t be anything more going forward.

Okay. Andrés Gluski: Regarding the wind in Brazil, this is Renova’s asset, these are contract – 18-year contract in reals indexed to CPI. I think we are buying them at a very attractive price. We will remain the people that in the past when Brazil was really booming, we never bought anything that – at those prices we didn’t think it was attractive, now we see this is being at attractive prices. I also think that it’s very important to get Tietê to be growing again and we are utilizing 100% of local financing for this project. So it’s an attractive acquisition and it really is a milestone for Tietê.

Okay. So around the reserve, I think you said this, it’s not an impact for ongoing earnings or how are you getting paid, I mean, it still be the case? Andrés Gluski: Absolutely not. It’s a short case.

Okay, good enough. Thank you.

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

Andrés, the 8% to 10% compound annual growth rate guidance, I assume has some 80% level of your vast development projects in it, can you kind of give me some color how much of your development projects outside of your vast development projects are embedded in that 8% to 10% growth rate. Andrés Gluski: Well, I think this is really anchored in the projects that we know. Southland is in these projects. The energy storage of Southland is there as well. We have the completion of OPGC 2 and the completion of Alto Maipo in 2019. Now besides that we do have some modest – we have the growth of sPower, that I’ve talked about 500 megawatts ramping up to 1 gigawatt towards the end of that period. We also have some growth in terms of distributed energy as well around 200 megawatts a year. Other than that it’s basically redeploying that cash, there will be other acquisitions that could be smaller ones add-ons, and there could be some additional energy storage project, again, modest energy storage project and – besides that growth. So, that’s what embedded in those numbers.

So, if I may, what you are telling me is that, this is about as conservative as you are going to get in terms of your guidance going forward? Andrés Gluski: I think it’s reasonably conservative. I do think if some markets really pop like energy storage and third party sales or something it could be superior to that. We have other things that we are looking at from diesel to other applications, but I think it’s reasonably conservative is the right approach to it. I wouldn’t say it’s a most conservative case.

Yes, you’ve been going through a lot of restructuring, selling, buying assets, where – can you tell me where you see AES’ mix of businesses, is that – what are you trying to drive towards? I mean it’s pretty clear in the U.S. you want to get clean, okay, so we understand that. The rest of world, what are your objectives in terms of how you want to poster AES going forward? Andrés Gluski: That’s a great question. What we see is we will continue our strategy, simplifying the portfolio. And I always said that we don’t need to be in 20 countries to really have the advantages of diversification. We do see having a strong footprint in the U.S. because it gives us stable cash flows, it’s also the most technologically advanced market in all regards, whether it would be energy storage, whether it would be – on the commercial sense and then we really see ourself being the bridge from that to faster growing markets. And with the big emphasis in Latin America and a big emphasis to the extent we can get dollar-denominated contracts. So that’s where we see AES of the future. Now we do see conventional energy as being an important part of this. We really see that as a great advantage to the extent you can integrate renewables into your product and service offerings to final clients. So there is a greening of the portfolio in large part because we are just seeing energy prices from renewables come down so much, also it’s because you can get long-term contracts for renewables. And finally because that’s a part of the market that’s growing, I mean almost 60% of new adds in the worlds are renewables. So in virtually all of our markets that’s a segment, that’s why we want to be there. On the other hand we see the advantages of AES as being able to integrate that into existing platforms. So platform expansions continues to be an important part of our strategy and it’s one of things we like very much about sPower, they have a platform expansion strategy.

Is it safe to assume that Brazil is going to get absorbed into MCAC at some point, once you deconsolidate Eletropaulo and it becomes a really small part of your business? Andrés Gluski: No, and I would say the following reason, I mean, Brazil has its own market, it has its own relations, it has its own regulatory structure, so we think they will have to continued to be managed in that way. Tietê is also a publicly listed company. Now we are very happy to start Tietê growing again, because I think that will have a good impact on local investors and the multiple we get for Tietê. Remember, our SBUs are basically organized around markets, so what we would like is that the teams there face similar clients, similar regulators, similar financial institutions.

Last question, Argentina, it sounds like AES is starting to think about keeping that business unit, is that something I’m imagining or is this something new that’s developing? Andrés Gluski: Well, we’ve always said that Argentina had significant upside potential and we are seeing that this year or actually started seeing it last year. I mean, Argentina, we sold it out of the distribution businesses, which were, I would say, difficult.

Yeah. Andrés Gluski: But we are left with a very solid, excellent technically generation business, which has made money pretty much every year. We had three years where weren’t able to pay dollar dividends, but Argentina is part of Andes SBUs, this is – synergies and some interconnections with the Chilean market.

Yes. Andrés Gluski: But we are seeing a tremendous progress in Argentina, tremendous progress in our business and I think it’s very much in line with what we were telling everyone before is that Argentina had significant upside potential and some of that upside potential is being realized. I think there is even more potential going forward.

Opportunities for more investments in Argentina possible? Andrés Gluski: Well, I think, if we did anything in Argentina, I would be using local leverage capacity, like we are doing in Brazil, like we are doing in the Dominican Republic.

I understand. Andrés Gluski: And in the past when we talked about proportional free cash flow and how we were paying down sub-debt and creating opportunities, I think, between DPP and Tietê are two excellent examples of how we can lever the local business, 100% levered and come up with attractive, in both cases very carbon friendly projects with long-term contracts.

Thank you very much.

Our next question comes from Charles Fishman with Morningstar. Please go ahead.

Good morning. Andrés, can you give – are you able to give anymore color on what the staffs objection was – Ohio staffs objection was to the settlement agreement? Andrés Gluski: No, we really aren’t. We are in negotiations now and we think we will reach the settlement, but we can’t give any more color. Sorry.

Okay. I thought that would be your answer. And then the second question was just to make sure I understand this, on the way you are reporting now, if I look at Slide 29, the consolidated free cash flow growth and if I deduct my estimate, okay, between 30% and 40% for the non-controlling interest, that would be equivalent to the way you used to report proportional free cash at the consolidated level, correct? Andrés Gluski: That’s right, yes.

Am I? Andrés Gluski: Yes, you are right.

Okay, thank you. Got it. I just want to make sure I have it right. That’s all I had. Thank you very much. Andrés Gluski: All right. Thank you, Charles.

Okay. So I think with this we conclude today’s call and we thank everybody for joining us on this call. As always IR team will be happy in answering your questions. Thank you and have a nice day.

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