AES Corporation’s (AES) adjusted EPS of 26 cents in the third quarter of fiscal 2009 was in line with the Zacks Consensus EPS estimate for the quarter. However, adjusted EPS for the quarter fell short by five cents compared to the year-ago EPS of 31 cents. The year-ago adjusted EPS had been boosted by 6 cents from currency transaction losses, 2 cents from incremental losses and a penny from mark-to-market losses. In comparison, the reported quarter’s EPS was affected by 3 cents from currency transaction gain and 2 cents from disposition losses. This was partially offset by 3 cents from mark-to-market losses. 

In the reported quarter, consolidated revenue decreased $481 million year-over-year to $3.8 billion. Of the downside, $367 million was due to the strengthening of the U.S. dollar relative to the Brazilian real, which depreciated 13%. Also, lower commodity input prices translated into lower revenues at its generation businesses in Chile, New York, Hungary and Northern Ireland. This was partially offset by higher revenues from the Latin American utilities business due to increases in tariff rates in Brazil, reflecting the recovery of energy purchases that had been passed on to customers. 

Consolidated gross margin increased $46 million to $1.0 billion, benefiting from improved operating performance at the generation businesses in Chile and the Philippines, as well as the recovery of bad debts at Eletropaulo, one of the company’s utilities in Brazil. These improvements were offset in part by the strengthening of the U.S. dollar relative to foreign currencies, totaling $79 million, and lower volume at Eastern Energy in New York due to unfavorable electricity pricing, resulting in lower dispatch. 

Proportional gross margin decreased $46 million to $555 million, primarily due to the unfavorable impact of foreign exchange rates as well as lower volumes at its wholly owned generation business in New York and its integrated utility in Indiana. These factors were offset in part by improved operations at Gener in Chile and Masinloc in the Philippines. 

AES Corporation reported cash and cash equivalents of $2.0 billion at the end of first nine months of fiscal 2009 from $903 million at year-end fiscal 2008. The company reported $1.9 billion in cash from operating activities at the end of the first nine months of fiscal 2009, compared to $1.6 billion at the end of the first nine months of fiscal 2008. Long term liabilities increased to $24.4 billion at the end of the first nine months of fiscal 2009 from $22.5 billion at the end of fiscal 2008. 

AES Corporation raised the mid-point of adjusted EPS guidance for fiscal 2009 by 1 cent to 9 cents. Earlier, the company had forecasted adjusted EPS to be in the range of $1.05 to $1.10.
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