AES Continues to Transform and Simplify; Achieved 2017 Guidance and Initiates 2018 Adjusted EPS Guidance of $1.15 to $1.25

The
AES Corporation (NYSE: AES) today reported financial results for the
year ended December 31, 2017.

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Adjusted EPS(1) Guidance and Expectations
(1) A non-GAAP financial measure. See "Non-GAAP Financial Measures" for definitions and reconciliations to the most comparable GAAP financial measures.
(2) From 2017 Adjusted EPS of $1.08, in line with prior expectation for 8% to 10% average annual growth through 2020 from the mid-point of 2016 Adjusted EPS guidance of $0.95 to $1.05.

Full year 2017 Diluted Earnings Per Share from Continuing Operations
(Diluted EPS) was ($0.77), a decrease of $0.73 compared to full year
2016, reflecting a one-time non-cash charge on deemed repatriation of
foreign earnings, resulting from the enactment of the U.S. Tax Cuts and
Jobs Act in the fourth quarter of 2017. This impact was partially offset
by lower impairment expense.

Full year 2017 Adjusted Earnings Per Share (Adjusted EPS, a non-GAAP
financial measure) increased $0.14 to $1.08, primarily driven by higher
margins, particularly at the Company's Mexico, Central America and the
Caribbean (MCAC) Strategic Business Unit (SBU), and contributions from
new businesses, including sPower in the United States.

Consolidated Net Cash Provided by Operating Activities for full year
2017 was $2,489 million, a decrease of $395 million compared to full
year 2016. This decrease was primarily driven by the large receivables
collection in 2016 at Maritza in Bulgaria, which was partially offset by
higher margins. Full year 2017 Consolidated Free Cash Flow (a non-GAAP
financial measure) decreased $323 million to $1,921 million compared to
full year 2016, primarily due to the same drivers as Consolidated Net
Cash Provided by Operating Activities.

"In 2017 we achieved our financial guidance for all metrics and made
further progress on our strategic objectives," said Andrés
Gluski, AES President and Chief Executive Officer. "We accelerated
the transformation of our portfolio by exiting 4.3 GW of merchant
coal-fired capacity and acquiring 2.3 GW of long-term contracted
renewables earning attractive returns. We also launched Fluence, our
joint venture with Siemens, to market our proprietary Advancion energy
storage solution in 160 countries. At AES, we are well positioned to
deliver sustainable and attractive returns to our shareholders, while
reducing our carbon intensity by 50% from 2016 to 2030."

"This year, we will prepay $1 billion in Parent debt, putting us on
track to achieve investment grade credit metrics in 2019, one year ahead
of our prior plan," said Tom
O'Flynn, AES Executive Vice President and Chief Financial Officer.
"As a result of our recently announced restructuring, we expect to
achieve an additional $100 million in annual cost savings, strengthening
our ability to deliver on our 8% to 10% average annual growth rate in
Adjusted EPS and Parent Free Cash Flow through 2020."

Guidance and Expectations

The Company is issuing 2018 Adjusted EPS guidance of $1.15 to $1.25 and
reaffirming its average annual growth rate target of 8% to 10% through
2020. Year-over-year growth in 2018 is primarily driven by contributions
from new businesses, cost savings and lower Parent interest.

The Company will no longer provide guidance for Consolidated Free Cash
Flow, as this metric does not accurately reflect the Company's ownership
interest in the underlying businesses given the high level of cash flow
attributable to noncontrolling interest. The Company believes that
Parent Free Cash Flow (a non-GAAP financial metric) is the most
appropriate metric to reflect its ability to achieve its financial
goals, including strengthening its balance sheet and delivering value to
shareholders.

For 2018, the Company expects Parent Free Cash Flow of $600 million to
$675 million. Relatively flat expectations for 2018 reflect lower
expected distributions from AES Gener, to ensure the maintenance of its
investment grade rating, as well as severance payments associated with
incremental cost savings. However, the Company expects to achieve higher
Parent Free Cash Flow in 2019 and 2020, to deliver 8% to 10% average
annual growth in Parent Free Cash Flow through 2020 from the Company's
2017 Parent Free Cash Flow of $637 million.

The Company's 2018 guidance and expectations through 2020 are based on
foreign currency and commodity forward curves as of December 31, 2017.

Strategic Highlights

• In February 2018, the Company announced a reorganization as a part of
  its on-going strategy to simplify its portfolio and optimize its cost
  structure.
  • The reorganization will result in an additional $100 million in
    annual cost savings to be realized through 2019. In the fourth
    quarter of 2017, the Company recorded $31 million in restructuring
    costs associated with these savings. These restructuring costs
    were excluded from Adjusted EPS.
• In the fourth quarter of 2017, the Company reclassified Eletropaulo,
  the Brazilian utility in which AES has a 17% economic interest, as
  discontinued operations. In 2017, Eletropaulo generated revenue of
  $3.3 billion and net income from operations of $3 million.
• The Company is establishing a goal to reduce its carbon intensity
  (tons of carbon dioxide/MWh) by 50% from 2016 to 2030. The Company has
  already taken steps that are expected to reduce its carbon intensity
  by 25%, or 20 million tons of carbon dioxide emissions, from 2016 to
  2020, including:
  • In 2017, the Company announced the sale or retirement of 4,322 MW
    of merchant coal-fired generation, representing 37% of the
    Company's coal-fired capacity.
    • This includes the sales of 1,743 MW in Kazakhstan, 739 MW at
      DPL in Ohio and 630 MW in the Philippines and the retirement
      of an additional 1,210 MW at DPL.
  • In 2017, the Company acquired 2,307 MW of renewable generation
    capacity with long-term contracts in the United States, Brazil and
    Mexico.
    • This includes 1,445 MW of solar generation, primarily from the
      1,145 MW sPower portfolio (US), and 862 MW of wind capacity in
      Brazil and Mexico.
  • The Company currently has 4,401 MW of capacity under construction
    and expected to come on-line through 2021.
    • In 2017, completed construction of 279 MW of solar, natural
      gas and energy storage capacity in the Dominican Republic and
      the United States.
  • In January 2018, AES and Siemens completed the formation of the
    Fluence energy storage joint venture.
  • In 2018, sPower signed long-term Power Purchase Agreements (PPA)
    for 582 MW of solar and wind to be completed in 2019 and 2020.

Non-GAAP Financial Measures

See Non-GAAP Financial Measures for definitions of Adjusted Earnings Per
Share, Adjusted Pre-Tax Contributions and Consolidated Free Cash Flow,
as well as reconciliations to the most comparable GAAP financial
measures.

Attachments

Condensed Consolidated Statements of Operations, Segment Information,
Condensed Consolidated Balance Sheets, Condensed Consolidated Statements
of Cash Flows, Non-GAAP Financial Measures, Parent Financial
Information, 2017 Financial Guidance Elements and 2018 Financial
Guidance Elements.

Conference Call Information

AES will host a conference call on Tuesday, February 27, 2018 at 9:00
a.m. Eastern Standard Time (EST). Interested parties may listen to the
teleconference by dialing 1-888-317-6003 at least ten minutes before the
start of the call. International callers should dial +1-412-317-6061.
The Conference ID for this call is 7348000. Internet access to the
conference call and presentation materials will be available on the AES
website at www.aes.com by
selecting “Investors”
and then “Presentations and Webcasts.”

A webcast replay, as well as a replay in downloadable MP3 format, will
be accessible at www.aes.com beginning
shortly after the completion of the call.

About AES

The AES Corporation (NYSE: AES) is a Fortune 200 global power company.
We provide affordable, sustainable energy to 15 countries through our
diverse portfolio of distribution businesses as well as thermal and
renewable generation facilities. Our workforce is committed to
operational excellence and meeting the world’s changing power needs. Our
2017 revenues were $11 billion and we own and manage $33 billion in
total assets. To learn more, please visit www.aes.com.
Follow AES on Twitter @TheAESCorp.

Safe Harbor Disclosure

This news release contains forward-looking statements within the meaning
of the Securities Act of 1933 and of the Securities Exchange Act of
1934. Such forward-looking statements include, but are not limited to,
those related to future earnings, growth and financial and operating
performance. Forward-looking statements are not intended to be a
guarantee of future results, but instead constitute AES’ current
expectations based on reasonable assumptions. Forecasted financial
information is based on certain material assumptions. These assumptions
include, but are not limited to, our accurate projections of future
interest rates, commodity price and foreign currency pricing, continued
normal levels of operating performance and electricity volume at our
distribution companies and operational performance at our generation
businesses consistent with historical levels, as well as achievements of
planned productivity improvements and incremental growth investments at
normalized investment levels and rates of return consistent with prior
experience.

Actual results could differ materially from those projected in our
forward-looking statements due to risks, uncertainties and other
factors. Important factors that could affect actual results are
discussed in AES’ filings with the Securities and Exchange Commission
(the “SEC”), including, but not limited to, the risks discussed under
Item 1A “Risk Factors” and Item 7: Management’s Discussion & Analysis in
AES’ 2017 Annual Report on Form 10-K and in subsequent reports filed
with the SEC. Readers are encouraged to read AES’ filings to learn more
about the risk factors associated with AES’ business. AES undertakes no
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Any
Stockholder who desires a copy of the Company’s 2017 Annual Report on
Form 10-K dated on or about February 27, 2018 with the SEC may obtain a
copy (excluding Exhibits) without charge by addressing a request to the
Office of the Corporate Secretary, The AES Corporation, 4300 Wilson
Boulevard, Arlington, Virginia 22203. Exhibits also may be requested,
but a charge equal to the reproduction cost thereof will be made. A copy
of the Form 10-K may be obtained by visiting the Company’s website at www.aes.com.

Adjusted PTC is defined as pre-tax income from continuing operations
attributable to AES excluding gains or losses of the consolidated entity
due to (a) unrealized gains or losses related to derivative
transactions; (b) unrealized foreign currency gains or losses;
(c) gains, losses and associated benefits and costs due to dispositions
and acquisitions of business interests, including early plant closures;
(d) losses due to impairments; (e) gains, losses and costs due to the
early retirement of debt; and (f) costs directly associated with a major
restructuring program, including, but not limited to, workforce
reduction efforts, relocations, and office consolidation. Adjusted PTC
also includes net equity in earnings of affiliates on an after-tax basis
adjusted for the same gains or losses excluded from consolidated
entities.

Adjusted EPS is defined as diluted earnings per share from continuing
operations excluding gains or losses of both consolidated entities and
entities accounted for under the equity method due to (a) unrealized
gains or losses related to derivative transactions; (b) unrealized
foreign currency gains or losses; (c) gains or losses and associated
benefits and costs due to dispositions and acquisitions of business
interests, including early plant closures, and the tax impact from the
repatriation of sales proceeds; (d) losses due to impairments;
(e) gains, losses and costs due to the early retirement of debt; (f)
costs directly associated with a major restructuring program, including,
but not limited to, workforce reduction efforts, relocations, and office
consolidation; and (g) tax benefit or expense related to the enactment
effects of 2017 U.S. tax law reform.

The GAAP measure most comparable to Adjusted PTC is income from
continuing operations attributable to AES. The GAAP measure most
comparable to Adjusted EPS is diluted earnings per share from continuing
operations. We believe that Adjusted PTC and Adjusted EPS better reflect
the underlying business performance of the Company and are considered in
the Company’s internal evaluation of financial performance. Factors in
this determination include the variability due to unrealized gains or
losses related to derivative transactions, unrealized foreign currency
gains or losses, losses due to impairments and strategic decisions to
dispose of or acquire business interests, retire debt or implement
restructuring initiatives, which affect results in a given period or
periods. In addition, for Adjusted PTC, earnings before tax represents
the business performance of the Company before the application of
statutory income tax rates and tax adjustments, including the effects of
tax planning, corresponding to the various jurisdictions in which the
Company operates. Adjusted PTC and Adjusted EPS should not be construed
as alternatives to income from continuing operations attributable to AES
and diluted earnings per share from continuing operations, which are
determined in accordance with GAAP.

For the year ending December 31, 2017, the Company changed the
definition of Adjusted PTC and Adjusted EPS to exclude (a) associated
benefits and costs due to acquisitions, dispositions, and early plant
closures; including the tax impact of decisions made at the time of sale
to repatriate sales proceeds, and (b) costs directly associated with a
major restructuring program, including, but not limited to, workforce
reduction efforts, relocations, and office consolidation. We further
changed the definition of Adjusted EPS to exclude tax benefit or expense
related to the enactment effects of 2017 U.S. tax law reform. We believe
excluding these benefits and costs better reflect the business
performance by removing the variability caused by strategic decisions to
dispose or acquire business interests or close plants early, as well as
the costs directly associated with a major restructuring program and the
impact of the 2017 U.S. tax law reform. The Company has also reflected
these changes in the comparative period.

AES is a holding company that derives its income and cash flows from the
activities of its subsidiaries, some of which may not be wholly-owned by
the Company.

The Company's non-GAAP metrics are Consolidated Free Cash Flow, Adjusted
Pre-tax Contribution (“Adjusted PTC”) and Adjusted Earnings Per Share
(“Adjusted EPS”) used by management and external users of our
consolidated financial statements such as investors, industry analysts
and lenders.

Consolidated Free Cash Flow (“Free Cash Flow”) is defined as net cash
from operating activities (adjusted for service concession asset capital
expenditures) less maintenance capital expenditures (including
non-recoverable environmental capital expenditures), net of reinsurance
proceeds from third parties. The company also excludes environmental
capital expenditures that are expected to be recovered through
regulatory, contractual or other mechanisms.

The GAAP measure most comparable to Free Cash Flow is net cash provided
by operating activities. We believe that Free Cash Flow is a useful
measure for evaluating our financial condition because it represents the
amount of cash generated by the business after the funding of
maintenance capital expenditures that may be available for investing in
growth opportunities or for repaying debt.

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