On Friday, AES Corp (NYSE:AES) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what the C-suite shared.
Julien Dumoulin-Smith – UBS: So, first question here, if I heard you right, Victoria, you mentioned a reduction in the TIPRA impact. I’d just be curious what happened there to drive that?
Victoria Harker – CFO and President, Global Business Services: Without going through huge amount of detail on the call, we expectedly looked at a number of the countries that generate the TIPRA related tax impacts for us and we look to changing some of the treatment relative to that from a reporting standpoint. It’s not recurring in terms of the benefit, but we do believe if we don’t get the extension, we can effectuate that in year taking the impact from $0.12 to about $0.02 to $0.03.
Julien Dumoulin-Smith – UBS: On the DP&L side, the first question, MRO versus ESP, it seems like the staff or PUCO broadly wanted – seems to desire an ESP can you still settle the case even though you have an MRO in front of you and how would that work just kind of logistically?
Andres Gluski – President and CEO: Julien, I’d like Andy to answer that.
Andrew Vesey – COO, Global Utilities and EVP: Thank you, Andres Gluski and good morning. As you know we did file the MRO because we believe that it was the best way to get out a good consolidation of a lot of the interest. Our MRO will deliver lower tariff rate or tariff customers over time including in 2013. The alliance with the statutes in Ohio and advances of the public policy towards competition and for us it really protects the financial integrity of the company and more importantly allows us to emerge in this transition period as a viable competitor in the market. That said the staff comments basically have indicated that they believe we could get all of those outcomes with an ESP and in fact advised that we consider and I think the words in their comments were strongly advised that we consider it because it had more advantages to us. We are entering the technical conference – pre-conference hearings next week. We have had a very open engagement with interveners and with staff. I think our view is that there is enough commonality of interest that settlement is a possibility and my sense is that as we move towards the evidentiary hearing in June will probably be the best time to find some common ground. So we are open to the comments. We are open to proposals. Our view is that if we were to consider moving forward from an MRO to an ESP we would only do so if it gave us the same benefits as the MRO does and if the staff is correct that there are greater advantages we surely would consider heading down the road of a settlement. And our view is that the settlement could be done in a timely way within the schedule laid out by the Commission. So I think that’s the way we are seeing it.
Julien Dumoulin-Smith – UBS: And then looking at the SG&A and integration of DP&L just on the cost front clearly executing on that but for the balance of the year and as you look into 2013 how does that kind of pan out for you guys? May be Victoria?
Andrew Vesey – COO, Global Utilities and EVP: Julian its Andy again, when we announced the acquisition I think we said that we were looking to somewhere around $40 million over time for that. We are making progress. I have to say since November since we have got it we have done a lot of work looking at all the costs analyzing the opportunities and we have started to pull out some synergies. I think what will be helpful to us as we get through the case we see how we come out will give us a better sense of the platform that we will have and what we are going to drive. My view is that within the next two years we will make substantial progress on that. As Andres has said the approach at DPL is three prong and they are almost in series. The first thing we have to do is we have to get the case completed so we have clarity on a lot of the issues. At the same time the next thing is to really continue to drive on the regulatory strategy. We have made a lot of changes. The adding of Phil Herrington is a very important step for us and with his competitive experience. We have integrated MC Squared into the retail function broadly at DP&L. we are doing a lot of operational sharing between our other businesses and that will lead us then to such really drive costs out for two reasons. One, is because I think across the business we should do that, we have the capability of AES to do that, but secondly because it will make us a much more able competitor in the marketplace. So the answer to your question, I think we are on track with the synergies as we are looking at them and they will materialize over the next 24, 36 months.
Andres Gluski – President and CEO: Julian as we have said we are really looking at it from a portfolio point of view. So a $1 saved is a $1 saved regardless of where it comes from. So we really want to bring to bear our synergies, economies of scale and operating knowhow so we really think of it from a portfolio point of view.
Julien Dumoulin-Smith – UBS: Great and just a quick last one here. Argentina there have been some clear news events about nationalization. Just first with regards any read throughs and secondly from a distribution perspective the expectation had been fairly minimal regardless. Right.
Andres Gluski – President and CEO: Regarding Argentina we have good relations with the government. We’ve done a number of sort of high profile projects such as burning the biodiesel, when (President) came to CCGT. And certain other high-tech. We have exited our distribution businesses which are the most regulated as you know we sold three distribution businesses over time. So I think our situation is different from that of a ypf which is cause of lot of the news and has some particular circumstances around it. Now regarding the importance of Argentina to our portfolio from the distribution from Argentina this year of $25 million and to put that in perspective that’s about 2% of our total. So we don’t expect a material impact of any possible developments in Argentina. But as I said you know we have a very productive relationship with the governments.
Gregg Orrill – Barclays: I was wondering if you could hit TIPRA again just in terms of the offsets that you found sort of what happens to the potential offset if TIPRA is extended, would you use those in later years or and I think you also said it was a one-time benefit if I heard you right.
Victoria Harker – CFO and President, Global Business Services: I think it’s probably not worth going through a huge amount of detail on this call, but it’s relative to our tax filings, relative to those particular countries that tend to generate the income for us that are TIPRA related in terms of the tax effects. So once we move down the path of doing that, it’s not duplicative set of benefits that we get if the TIPRA legislation is enacted later this year, but we don’t have it on a recurring basis. It’s just would occur this year. Again, if we take the full year impact to about $0.02 to $0.03 from about $0.12 that we had anticipated before.
Ahmed Pasha – VP, IR: I think – this is Ahmed. I mean, you saw tax strategies dragged, I mean that our tax group has implemented and they always do that. I mean, this is a tax planning at the end of the day that has helped us to avoid $0.06 to $0.07 potential impact.
Andres Gluski – President and CEO: What I think is important I mean, we expect TIPRA to be extended, and what we are doing, in no way affects sort of – if it does get extended, there’s nothing that we have lost as a result of these actions. Do realize that if it were to be extended, we could change the way we, I would say we upstream cash from these big businesses, mainly the big businesses in Chile and Brazil as a result of this, but it’s as I said, we said from the very beginning that we expected it to be extended and we also said that we were working on offsetting strategies if just in case it wasn’t extended. So we are fulfilling, I think exactly what we said, and we still think it’s going to be extended just like it was in 2010.
Gregg Orrill – Barclays: In terms of the buyback, if you could, Andres, just kind of clarify what you were saying there about coming back to us on capital allocation later in the year. I wasn’t sure if you were meaning to say that you weren’t going to be buying back stock in the quarter for one reason or another, because the cash wasn’t available?
Andres Gluski – President and CEO: No, not at all. What I said is that, as you know, in the fourth quarter of 2011, we were quite aggressive on our buybacks. We did not do any buybacks in the first quarter of this year and the reason for that as we said is that we had to complete the acquisition of DP&L, and then we wanted to pay the outstanding balances on our revolver. Going forward, as I said we believe that at these prices, its good value for us to do buy back. What I did mention there is that all of the available cash that I had mentioned, the $1.3 billion does not including any additional asset sale. Because if we do additional asset sales and as we see the new projects progress, that one-third of the total amount which is approximately $360 million without additional asset sales, that will be coming back and giving a greater clarity in terms of where we are using that money. So I hope that answers it. I’m not saying at all that going forward, that we would not be doing any stock buybacks at this point in time.