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AES sees improved Q4 earnings, initiates 2018 adjusted EPS guidance

AES Corp. on Feb. 27 posted a year-over-year increase in fourth-quarter 2017 free cash flow to $668 million compared to $535 million for the comparable quarter of 2016.

The company's fourth-quarter 2017 consolidated net cash from operating activities increased to $800 million from $702 million in the corresponding quarter of 2016, while adjusted EPS was 43 cents, from 30 cents in the same period of 2016.

The S&P Capital IQ normalized EPS consensus estimate for AES in the most-recent quarter was 36 cents.

Fourth-quarter 2017 revenues reduced to $2.64 billion, from $2.66 billion in the similar period of 2016. Fourth-quarter 2017 net loss attributable to AES common stockholders was $1.34 billion, or a loss of $2.03 per share, compared to a net loss attributable to AES common stockholders of $949 million, or a loss of $1.44 per share, in the closing months of 2016.

The company's Andes business unit reported fourth-quarter 2017 revenue of $731 million, compared to $642 million, while the U.S. business results lowered to $784 million compared to $847 million in same quarter of 2016. The Brazilian business unit revenue slightly increased to $144 million during the 2017 fourth quarter, from $111 million in the fourth quarter of 2016. The Mexico, Central America and the Caribbean businesses grew fourth-quarter 2017 revenues year over year to $597 million, from $576 million in the fourth quarter of 2016. AES' Eurasian business unit reported fourth-quarter 2017 revenue of $386 million, compared to $421 million in the fourth quarter of 2016.

On a full-year basis, the 2017 consolidated free cash flow decreased to $1.92 billion from $2.24 billion in 2016.

Consolidated net cash from operating activities for 2017 dropped $395 million year over year to $2.49 billion, compared to $2.88 billion in 2016. The results were primarily driven by the large receivables collection in 2016 at Maritza in Bulgaria.

For full-year 2017 adjusted EPS was $1.08, beating the normalized EPS consensus estimate of $1.02, due to higher margins, particularly at the company's Mexico, Central America and the Caribbean strategic business unit, and contributions from new businesses, including sPower in the United States.

Full-year 2016 adjusted EPS for AES was 94 cents.

AES also reported 2017 revenues of $10.53 billion compared to $10.28 billion in 2016. Net loss attributable to AES for 2017 was $1.16 billion, or a loss of $1.76 per diluted share, compared to a net loss attributable to AES of $1.13 billion, or $1.72 per diluted share, for 2016.

AES announced to target 2018 adjusted EPS of $1.15 to $1.25. The company expects 2018 parent free cash flow of $600 million to $675 million, with higher parent free cash flow in 2019 and 2020.

"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," AES Executive Vice President and CFO Tom O'Flynn said in an earnings release. "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."