Good morning, and welcome to the AES Corporation's Third Quarter 2019 Financial Review Conference Call. [Operator Instructions] Please note, today's 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, Andrea. Good morning, and welcome to our third quarter 2019 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; Gustavo Pimenta, our Chief Financial Officer; and other senior members of our management team. With that, I will turn the call over to Andrés. Andrés? Andrés Gluski: Good morning, everyone, and thank you for joining our third quarter 2019 financial review call. Today, I will walk through the highlights of the quarter and how we are delivering on our commitments and successfully executing on our strategy. Gustavo will then follow with a detailed description of our third quarter and year-to-date financial results. Our adjusted earnings per share for the third quarter was $0.48, which is 37% higher than our results for the same quarter last year. On our prior call, we mentioned that much of our growth would be in the second half of the year, and our strong third quarter results are in line with our expectations. We are on track to deliver on our 2019 adjusted EPS guidance with the midpoint of $1.34, and our apparent free cash flow target with a midpoint of $725 million, and we are confident in our ability to deliver 7% to 9% average annual growth through 2022. I am pleased to report that we're making good progress on the strategy we laid out on our previous calls. Allow me to walk you through step-by-step. First, turning to Slide 4. Let us talk…

Thank you, Andrés. Today our overall financial results outlook for 2019 and capital allocation. Overall, we are very encouraged by our performance to date and remain confident in our ability to deliver on our strategic and financial objectives. As shown on Slide 15, in the third quarter adjusted EPS was $0.48, primarily reflecting contributions from new businesses including AES Colon in renewables in the U.S. and a lower tax rate. The timing of outages, net of related insurance recovery also had a positive impact on the results in our MCAC region. In the third quarter of 2018 a freak lightning strike caused major damage at our Andrés plant in the Dominican Republic forcing it offline with roughly $0.04 impact. In Panama our Changuinola plant has been on an extended plant outage for most of this year. While we have insurance to offset the large portion of this outages. The timing of recognition is not always evenly distributed throughout the year. On our second quarter call, we indicated that we expected a recovery in the second half related to this outages. And in fact the majority of this occurred in the third quarter. This was about $0.05, which effectively catches us up for the first half of the year. As seen on the Slide 16 on a year-to-date basis, the net impact of losses versus insurance recovery is slightly negative at $0.01. Importantly, our Andrés facility is fully online in our Changuinola plant is on track to come back online in early 2020. Turning to Slide 17. Adjusted pretax contribution or PTC was $426 million for the quarter, an increase of $99 million or 30%. I will cover our results in more detail over the next four slides, beginning on Slide 18. In the U.S. and Utilities SBU increased PTC reflects…

[Operator Instructions] First question comes from Julien Dumoulin-Smith of Bank of America. Please go ahead.

So I - perhaps, can you elaborate a little bit in the context of the quarterly earnings here. How much is coming directly from renewables and perhaps to take that a step further, how do you think about the cadence of renewable contributions from here on out, obviously we're starting to see it pick up. How do you think about that rolling into the 4% to 6%, or I know not to get ahead of 20, but how do you think about that even year over year here?

Hi Julien, Gustavo. So, in the - particularly in the quarter, most of the growth is in the MCAC region as I mentioned in my remarks. So, the U.S. on the renewable space, probably, we have a $0.01 to $0.02 in the quarter no more than that. And so that's probably what it should be seen on an annual basis, maybe $0.04 to $0.05 growth because we are deploying around $300 million globally, most of that in the U.S. So that's what you will be seeing going forward.

And then perhaps more importantly here in the near term, you talked about some new LNG opportunities, a JV effort. Also from what I understand, you have some excess marketing volumes, if you will, in Panama, going into 2020 given the IMO regulations. How do you think about the timing to monetize some of those remaining volumes and also the earnings profile of your latest expansion on LNG, perhaps you can address it more holistically on LNG? Andrés Gluski: Sure. This is Andrés. So I think we've done exactly what we had been sort of saying that we could do in the Dominican Republic. So basically, we filled up our 70 tera BTU tank there. So, basically it's at full capacity. By signing this joint venture with other local generators, we need additional capacity. So, we're going to build a second tank with 50 tera BTUs capacity and about 30 tera BTUs is that at - is either agreed to or in the process of that signing agreements for, so that's already quite taking up 60% of the new capacity of the tank. So, this in the Dominican Republic, I think we have really followed through on what we said was possible. In the case of Panama, we have an 80 tera BTU tank. Right now, that's at most about 30% used and so there is considerable capacity to put other generators on gas, and so Panama does have other natural gas projects. It also has a lot of diesel plants, not too far from our plant. So really, it's a question of how fast we can connect those. It also has the capacity for re-export just like we have in the Dominican Republic and also for CNG in terms of trucks and local - local industry. So, I think the point is that in the Dominican Republic we do have capacity now for once we complete this tank for another 20 tera BTUs. And we continue to have about 50 tera BTUs in Panama that are available. So, it's going to be a combination of as we did in the Dominican Republic, local demand, additional power plant. It's going to be additional industries and transportation. And I think, growing over time is the re-export. So, we are exporting natural gas from the Dominican Republic to for example, Guyana, Barbados, Haiti, and there are other possibilities as well, and obviously the Central American region has possibilities as well for the export of natural gas.

But not ready to quantify earnings contributions or earnings growth in that segment? Andrés Gluski: We think - the potential is maybe $0.05 to $0.04 by 2022. Yeah, in the MCAC. I mean this is not counting, of course what we could be doing in Vietnam. So this is we have - is the Vietnam project it would be another $300 plus million of equity going into the project, and we expect good returns on that as well. So, as you can see, that would be a big contributor to our earnings growth post 2024.

Right. The $0.04 to $0.05 is off of today is in terms of incremental growth through 2022? Andrés Gluski: That's correct. That's the opportunity. So, you know in the past we had talked about $0.05 what we basically filled up some of that in the Dominican Republic. So, the additional tank puts us back in another sort of $0.04 to $0.05 of potential upside.

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

Couple of questions, I think you just answered, probably answered one of them, you have $200 million allocated in your - on Slide 25 to Vietnam LNG and CCGT investment, but I was going to ask whether that's the total expected investment because the - I guess it comes online in '24 and you said you actually just said it would be $300 million to $400 million. Is that right?

Gustavo here, Greg. That's right. So that is in 2022, so we’re probably going to reach financial close into 2021, spend half of the equity in 2022 which is this 200 that we see in the chart and then 2023 will draw additional $150 million to complement our investment.

Yes, and I know you have disclosed contract terms, but you would expect to target like a mid-teens levered equity return on projects with this risk profile. Is that fair?

That's about right, yes.

And can you give us a sense of what a strategic alliance, like the one you've announced with Google means in terms of your competitive advantage, signing commercial agreements with them and how that translates into confidence in the growth profile at the renewables business. It's just hard to not to be cynical, but it's hard to separate what's a PR announcement versus what has tangible backlog implications?

Yes, well, you know Greg, as you know that we've been, I think certainly not people to sort of chase shiny object. We really go to the fundamentals, what does this mean. Now this is a preliminary announcement it has many components to it and we will be providing color as things develop and things materialize. But realize first that we are sort of uniquely positioned to help Google meet its 24/7 renewable zero carbon energy across the globe. So we are uniquely positioned to do that. We recently won a bid in Chile for about 125 megawatt to do exactly that. So this is - that was the first stage concrete, there will be others we believe, and as I said, it will be in targeted U.S. and Latin American markets. Second is to realize that the biggest, the fastest growing sector of corporate demand is web services. So, I believe, Google has announced about 6 gigawatts of need across the globe. So this is, it's a big target, it's growing, and this is the fastest growing corporate sector, what they want is renewable energy around the clock. We are uniquely well positioned to deliver that. So again there will be follow-ons to the Chile deal we believe and stay tuned to that. In addition, there is some elements of energy management in these locations for us using our portfolio to provide carbon free around the clock energy. Then there is also, I would say on the - on our platform, the opportunity to optimize and continue to deliver cost, cost reductions. So we've been doing spending years quite frankly cleaning up data, because again, a lot of buzzwords that people throw out AI machine learning, it's only as good as the data you have. So we've been cleaning…

Last question for you on the Fluence JV obviously making good progress. It doesn't sound like right now, it's actually creating any concrete economic value in terms of cash distributions or earnings contributions to AES Corp, but when do we get to a tipping point where it's either potentially a significant cash flow earnings contributor or is there another way that we monetize this value for shareholders like could this be a standalone sort of public market IPO at some point if it really gets to critical mass. I mean, what are the different ways now that you're really making headway selling the product globally that you can monetize that value for shareholders?

Well, as you know, you hit the - I think the nail on the head, it's really how do we monetize that value. This is not - you know a regulated asset, it's a marginal contributor. We have to think about it differently. So we've created a market leader in the market that's growing at 100% per year. It's going to have a major impact on the future of our sector. So again, it's not a sort of a marginal investment, you have to think about all the value we're creating by this. As I - we mentioned, we are not, it is cash and variable margin positive but that money is going into the business to prepare it for really scaling up, I mean it grew a 100% last year. So you have to scale it up. So I think it's creating a lot of value for our shareholders directly in the business and some point it will probably make sense to really have a marker out there. So you guys can get a feeling for what it's worth, because we think we've created a lot of value in the business, there are various ways to do that, but I think a marker, would be very good to be able to put it into what's its value within the AES portfolio. But I have no doubt that this is going to be a major part of our business going forward. And I mean our sector going forward. And do realize that it is giving us a competitive advantage in winning renewable PPAs, because we know as much as anybody about how to integrate energy storage and some very exciting developments coming in the Fluence space. So stay tuned, in terms of products, in terms of new ideas. So for example, one in Chile, we making the world's first virtual reservoir or you can take a run of the river hydro, which is Las Lajas and really instead of having to dispatch the energy 24/7 you can quite frankly not dispatch it when energy prices are low, mostly due to solar and inject that energy when prices are much higher. So there's a lot of innovation going down it's very exciting.

Our next question comes from Christopher Turnure of JPMorgan. Please go ahead.

I just wanted to go through the quarter a little bit here in 2019 as a whole in terms of kind of nonrecurring items. So $0.48 for the third quarter, adjusted EPS, is it fair that the $0.05 of insurance proceeds there are nonrecurring? And with, I guess, plants back online in Panama now, anything else to think about for the fourth quarter or continuing into 2020 in relationship to that?

Chris, Gustavo here. No, not really, I think the $0.05 is recurring because it's a catch-up from the first half, we may recall in the second call - second quarter call, as we mentioned that our first half was slightly weaker versus our expectation due to those outages and we expected to recover a large portion of that impact in Q3, Q4 and that's what happened, so it's - it's really a catch-up from the first half, you should read this as a first half figure and not as - as a one-time. So that's what it is.

And then I think you said kind of net of the insurance, it would still be $0.01 negative for you for the Panama outage, at least, so that why the kind of your 2020 number - or there would be kind of no residual effects going to 2020, the net '19 number would be almost not impacted? Andrés Gluski: That's correct. That's correct.

And any other kind of nonrecurring items helping or hurting Q3 in terms of having a meaningful effect? Andrés Gluski: Not really, I think the one that I pointed out in my remarks, was tax, it's relatively within the range on a year-to-date basis, but you may recall, last year we had unusual low tax rate. So that is one thing for us, that would probably it won't be happening in the Q4 of this year, but a part of that nothing - no one-time-ish.

And then just, I guess, a little bit longer term, when we look at what's occurred so far this year, after you introduced your kind of new long-term plan or rolled forward your long-term plan back in February. You've reached investment grade, maybe a little bit faster than the plan, interest rates have been kind of going in your favor and everyone's favor, some LNG success certainly has materialized maybe partly offset by the Ohio DMR situation. I'm just wondering kind of where the bigger maybe surprises versus your plan have occurred, if any, your long-term plan, that is? Andrés Gluski: Yes, Chris, I agree with everything except what you said about the DMR. We think that continue to feel good about the successful resolution of this, so we agree that we've had some upside. And I think quite frankly those things which are under control we've consistently I think over delivered whether it's paying down debt, reducing costs growing the LNG business are growing renewables. So, that's true, but we really don't see that the - I wouldn't put the DMR is - we continue to feel good about it and it remains on track.

So kind of rolling all that together, it sounds like you feel like you're executing on your plan and really not getting ahead of yourselves at all in terms of some of the positives that have occurred? Andrés Gluski: Again, we are executing on our plan and I think we've delivered some things ahead of schedule that is certainly true. I mean we have been talking about getting our sort of the investment grade stats this year and, but we upfronted that we paid down more debt. I think it's very important that we said we pay down $150 million of recourse debt, we paid down of $450 million. So we have been over-delivering.

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

Good morning, Andrés, first question, I recall, I think it was maybe last quarter or two quarters back when you roll forward your growth aspirations and came up with the 7% to 9% growth rate for '18 through '22. At that time, you had also told us that the old growth rate, which was '17 through '20 and 8% to 10% that you would end up at the high end of that growth rate. I just want to confirm that that's still your conviction as we sit here today.

Yes. Gustavo, here. The short answer is yes. We will be providing color on February, but as I said in my remarks, we are reaffirming the 7% to 9% and to your question, yes, that's our expectation.

Second question, looking through your numbers year-to-date, you got about $124 million of distribution from Argentina to the Parent. Is that a good number on a run rate for the annual Argentine cash flow subsidiary distributions and how should we think about the capital controls that are currently in place or your prior experience perhaps in dealing with the leftist government in terms of what the cash flow implications and offsets could be going forward?

Okay. Yes. Regarding Argentina, no that's not a - the run rate, what we had said in the past, as you know that we had three years where we did not distribute dollar dividends from Argentina. And so there was a catch-up in recent years. Now having a portfolio like ours as Gustavo mentioned in his speech, we don't expect this to affect us and also in Argentina is one that is a little bit of up and downs. We've been there in good times, we've been there in bad times. We've always made money, even in 2002 we made money in Argentina that I think reflects the quality of our assets and the fact that they're very lowly levered. So this is not the sort of the run rate with current exchange controls in place, we don't expect to be paying material dividends out of Argentina, certainly next year. But we've always, you know it's again operated well there. We have put a big back-office there. And so that's one way of, quite frankly, if you will, dollarizing is by using our pesos in Argentina to get services which are worth dollars to us. So that helps offset to some of this. So to be clear, in Argentina, we've always made money, we've always been capable of paying dividends, just we haven't always been able to buy the dollar. So if you look historically, the average is more like $70 million or so, and it's been like 5% to 6% of subsidiary distributions over time. So, and this is quite frankly what I expect in Argentina, it's kind of up and downs. But it's, we've operated well there and I expect this getting sort of up and downs, but it's not something that's going to materially affect our forecast.

And then finally, Andrés, another topic that in prior quarters, used to get more attention, but we're not hearing much about is but - Merits and Bulgaria. Can you just give us an update of everything that's going on there on the contract or what your expectations are looking forward? Andrés Gluski: Sure. Really we have nothing new to report on merits so that's why it wasn't part of our speech. We continue to be paid on time. The plant is being dispatched and now we're entering the winter season, which becomes even more important, they are up to date on their payments, the off-takers financial situation, NEK is strong. The country is growing strong, and it remains investment grade. So those things continue. And regarding the illegal state aid case in front of the European Commission, our advisors continue to talk. So we have no official case yet and they continue to talk. And so, as I - we said before, we have really nothing new to report, but the asset is doing well.

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

On Andrés on the Vietnam contract. Okay, the projects approved by Vietnam and you said you're in negotiations I guess for the long-term contracts, with the contracts be with the government or were you referring to contracts with LNG in quarters what contracts are those?

Charl, that's a good question. Basically look there are two projects both supporting each other. So, the first is the 480 tera BTU regasification and storage terminal. So to put that in context. Today, we have about 150 tera BTUs between Panama and the Dominican Republic, with the additional 50 tera BTUs that will go to about 200 tera BTUs. So this is a very large project. Now in this case, we have about 38% of the project and PetroVietnam has the remainder. So we have a partner in this project. So, where will the gas go? There is about 6 gigawatts I believe of gas five turbine in Vietnam. There had been using offshore gas, which is running out. So there will be immediately a demand for the LNG terminal. In addition to our 2.2 gigawatts of combined cycle gas plant, which would be using that gas. Now in the second project on the combined cycle gas turbine plants. The 2.2 gigawatts we own 100% of that. So when we talk about contracts or different contracts. So one would be of course of the contract between the LNG terminal and the generators, including ourselves. Then there is the off-take of the energy and capacity coming from the 2.2 gigawatts of new generation. And I realize we have a 1.3 gigawatt plant already in Vietnam, Mong Duong 2which has done very well performing, it is one of the best performers in the country, we built it on time and on budget. As a long-term dollar-based contract, it's been paying on time. So basically, it would be like a repeat of Longjiang-2 only burning gas this time. The other contracts for example between the supply of gas to this is Son My 2 is the name of the terminal that contracts have yet to be negotiated and obviously would be PetroVietnam and ourselves negotiating with U.S. gas suppliers. So those have yet been negotiated. But in general the - it's a very firm commitment by us and then by the Government of Vietnam to do this project. And so I'd say the one thing that distinguishes it from, say, the projects in Panama and the Dominican Republic, is that - the demand is there. So it's not a question of building a terminal storage facility where the anchor tenant plant that you build a 30% of it. In this case it's going to be use - the use is going to be much, much faster, getting to the 90% plus usage.

Our next question comes from Gregg Orrill of UBS. Please go ahead.

Yes. Thank you. I was wondering if you could touch on the BHP contract, BHP buyout of a PPA in Chile and whether that was a driver for the return of capital increase that you reported in the quarter? Andrés Gluski: So there are two part. The - responding to the second, absolutely no, nothing has occurred yet. This will take effect two years. So it hasn't affected our returns of ASN there at all at this point. The second was that you know BHP has a - let's say a mandate from Corp to go green. So they put out a bid for 6 terawatt hours of new energy and what came back was basically about may a bit more than half of it was existing hydros in Chile. The other ones are renewables. So this will replace our existing contract. No, our contracts, generally we make our money on the capacity payments, energy is a pass-through. So for our contract, they have to make us whole, if they're not going to use our capacity. So they have mentioned a number in their press release of a value of about $780 million. This has yet to be absolute - the exact number has yet to be negotiated. We think it's sort of around $800 million, but this is yet to be negotiated. But basically this shows, I think the strength of our contracts in Chile, you know lot of people are questioning the value of these contracts. And I think this shows that these contracts are very solid. So they will pay us for this future - the present value of that future capacity it was running through 2029. And there is still about - plant is about 20% contracted. And so this will be - it's a business decision by BHP and it's I think shows the strength of our contracts and the business in Chile.

Do you think that will impact your growth rate guidance? Andrés Gluski: No, absolutely not.

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

We thank 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. Next week, we look forward to see - seeing many of you at the EEI conference in Orlando. Thanks again and have a nice day.

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