MORRISTOWN, N.J., July 26,
2016 /PRNewswire/ -- Covanta Holding Corporation (NYSE: CVA)
("Covanta" or the "Company"), a world leader in sustainable waste
and energy solutions, reported financial results today for the
three and six months ended June 30, 2016.
|
Three Months
Ended
June 30,
|
|
2016
|
|
2015
|
|
(Unaudited, $ in
millions, except per share amounts)
|
Revenue
|
$418
|
|
$408
|
Net Loss
|
$(29)
|
|
$(6)
|
Adjusted
EBITDA
|
$82
|
|
$83
|
Cash flow provided by
(used in) operating activities
|
$27
|
|
$(11)
|
Free Cash
Flow
|
$(5)
|
|
$(40)
|
Diluted Loss Per
Share
|
$(0.23)
|
|
$(0.05)
|
Adjusted
EPS
|
$(0.22)
|
|
$(0.06)
|
|
Reconciliations of
non-GAAP measures can be found in the exhibits to this press
release.
|
"We saw continued improvement in our waste pricing in the second
quarter, driven by growth of profiled waste volumes and strong
market dynamics in the Northeast," stated Stephen J. Jones, Covanta's President and
CEO. "Construction at our Dublin EfW facility is on track and
we expect to have waste contracted for approximately 90
percent of facility capacity by the end of the year. The
modest rebound we have seen in the commodity markets since the
beginning of the year is encouraging and overall, we've positioned
ourselves for a solid finish to the year, in line with our initial
expectations."
Second Quarter Results
For the three months ended
June 30, 2016, total revenue increased by $10 million to $418
million from $408 million in
Q2 2015. An increase in waste and service revenue was
partially offset by a decrease in energy revenue.
Same store North America EfW revenue decreased by $1 million as follows:
- waste and service revenue increased by $4 million, primarily driven by price
improvement;
- energy revenue decreased by $4
million, primarily driven by lower market prices; and
- recycled metals revenue decreased by $2
million, driven by lower market prices.
Also within North America EfW revenue, contract transitions
resulted in an increase of $5 million
due to additional energy revenue sharing.
All other revenue (non-EfW operations) increased by $3 million on a consolidated basis. Waste
and service revenue from non-EfW operations increased by
$16 million, primarily due to
contribution from newly acquired environmental solutions businesses
and the New York City MTS contract. Energy revenue from
non-EfW operations decreased by $17
million, representing the contribution from biomass
facilities and China in the prior
year.
Excluding impairment charges(1), operating expense
increased by $10 million to
$409 million. The year-over-year
increase was primarily due to:
- a $9 million increase in North
America EfW plant operating expense;
- a $12 million increase in
North America segment non-EfW
plant operating expense, primarily related to operations in our
newly acquired environmental solutions businesses, the New York
City MTS contract, start-up of the centralized metals processing
facility, and higher accruals for employee incentive compensation,
partially offset by shutting down remaining biomass
facilities;
- a $7 million decrease in plant
operating expense outside the North
America segment due to the exchange in ownership interests
in EfW facilities located in China; and
- an $8 million decrease in
North America other operating
expense primarily related to construction projects at Honolulu and Durham-York EfW facilities in the
prior year.
Adjusted EBITDA declined by $1
million on a year-over-year basis to $82 million, primarily due to lower prices for
energy and metals and increased accrual for employee incentive
compensation, partially offset by the contribution of newly
acquired environmental solutions businesses and contract
transitions.
Free Cash Flow increased by $35
million to $(5) million,
primarily as a result of a smaller outflow from working
capital, partially offset by higher maintenance capex.
Adjusted EPS decreased by $0.16 to
$(0.22). The decrease was driven
primarily by book income taxes, partially offset by
higher operating income.
Shareholder Returns
During the quarter, the Company
declared a regular cash dividend of $0.25 per share, totaling $33 million.
(1) Q2 2016 and Q2 2015 include impairment charges of
$4 million and $24 million, respectively. For additional
information, see Exhibit 4 - Note (a) of this press release.
2016 Guidance
The Company is reaffirming its guidance
for 2016 for the following key metrics:
(In
millions)
|
|
Metric
|
2015
Actual
|
2016
Guidance Range(2)
|
Adjusted
EBITDA
|
$
428
|
$390 -
$430
|
Free Cash
Flow
|
$
147
|
$140 -
$180
|
(2) For additional information on the reconciliation
of Free Cash Flow to Cash flow provided by (used in) operating
activities, see Exhibit 5 of this press release.
Conference Call Information
Covanta Holding
Corporation (NYSE:CVA) ("Covanta" or the "Company") will host a
conference call at 8:30 AM (Eastern)
on Wednesday, July 27, 2016 to
discuss its second quarter results. The conference call will begin
with prepared remarks, which will be followed by a question and
answer session. To participate, please dial 1-800-860-2442
approximately 10 minutes prior to the scheduled start of the
call. If calling from Canada, please dial 1-866-605-3852. If calling
outside of the United States and
Canada, please dial
1-412-858-4600. Please request the "Covanta Holding Corporation
call" when prompted by the conference call operator. The conference
call will also be webcast live from the Investor Relations section
of the Company's website. A presentation will be made
available during the call and will be found on the Investor
Relations section of the Covanta website at www.covanta.com.
A replay will be available one hour after the end of the
conference call through 9:00 AM
(Eastern) August 3, 2016. To access
the replay, please dial 1-877-344-7529, or from outside of
the United States 1-412-317-0088
and use the replay conference ID number 10089385. The webcast will
also be archived on www.covanta.com.
About Covanta
Covanta is a world leader in providing
sustainable waste and energy solutions. Annually, Covanta's modern
Energy-from-Waste facilities safely convert approximately 20
million tons of waste from municipalities and businesses into
clean, renewable electricity to power one million homes and recycle
approximately 500,000 tons of metal. Through a vast network of
treatment and recycling facilities, Covanta also provides
comprehensive industrial material management services to companies
seeking solutions to some of today's most complex environmental
challenges. For more information, visit www.covanta.com.
Cautionary Note Regarding Forward-Looking
Statements
Certain statements in this press release may
constitute "forward-looking" statements as defined in Section 27A
of the Securities Act of 1933 (the "Securities Act"), Section 21E
of the Securities Exchange Act of 1934 (the "Exchange Act"), the
Private Securities Litigation Reform Act of 1995 (the "PSLRA") or
in releases made by the Securities and Exchange Commission ("SEC"),
all as may be amended from time to time. Such forward-looking
statements involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance
or achievements of Covanta Holding Corporation and its subsidiaries
("Covanta") or industry results, to differ materially from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Statements that are not historical
fact are forward-looking statements. Forward-looking statements can
be identified by, among other things, the use of forward-looking
language, such as the words "plan," "believe," "expect,"
"anticipate," "intend," "estimate," "project," "may," "will,"
"would," "could," "should," "seeks," or "scheduled to," or other
similar words, or the negative of these terms or other variations
of these terms or comparable language, or by discussion of strategy
or intentions. These cautionary statements are being made pursuant
to the Securities Act, the Exchange Act and the PSLRA with the
intention of obtaining the benefits of the "safe harbor" provisions
of such laws. Covanta cautions investors that any forward-looking
statements made by Covanta are not guarantees or indicative of
future performance. Important factors, risks and uncertainties that
could cause actual results to differ materially from those
forward-looking statements with respect to Covanta include, but are
not limited to: fluctuations in the prices of energy, waste
disposal, scrap metal and commodities; adoption of new laws and
regulations in the United States
and abroad; the fee structures of our contracts; difficulties in
the operation of our facilities, including fuel supply and energy
transfer interruptions, failure to obtain regulatory approvals,
equipment failures, labor disputes and work stoppages, weather
interference and catastrophic events; difficulties in the
financing, development and construction of new projects and
expansions, including increased construction costs and delays;
limits of insurance coverage; our ability to avoid defaults under
our long-term service contracts; performance of third parties under
our contractual arrangements; concentration of suppliers and
customers; increased competitiveness in the energy industry;
changes in foreign currency exchange rates; limitations imposed by
our existing indebtedness; exposure to counterparty credit risk and
instability of financial institutions in connection with financing
transactions; our ability to utilize our net operating losses;
failures of disclosure controls and procedures; general economic
conditions in the United States
and abroad, including the availability of credit and debt financing
and market conditions at the time our contracts expire; and other
risks and uncertainties affecting our businesses described in Item
1A. Risk Factors of our Annual Report on Form 10-K and in other
filings by Covanta with the SEC.
Although Covanta believes that its plans, intentions and
expectations reflected in or suggested by such forward-looking
statements are reasonable, actual results could differ materially
from a projection or assumption in any of its forward-looking
statements. Covanta's future financial condition and results of
operations, as well as any forward-looking statements, are subject
to change and inherent risks and uncertainties. The forward-looking
statements contained in this press release are made only as of the
date hereof and Covanta does not have, or undertake, any obligation
to update or revise any forward-looking statements whether as a
result of new information, subsequent events or otherwise, unless
otherwise required by law.
Covanta Holding
Corporation
|
Exhibit 1
|
Condensed
Consolidated Statements of Operations
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited)
(In millions, except per share amounts)
|
Operating
revenue
|
|
|
|
|
|
|
|
Waste and service
revenue
|
$
|
297
|
|
|
$
|
276
|
|
|
$
|
576
|
|
|
$
|
522
|
|
Energy
revenue
|
86
|
|
|
99
|
|
|
187
|
|
|
211
|
|
Recycled metals
revenue
|
17
|
|
|
17
|
|
|
30
|
|
|
33
|
|
Other operating
revenue
|
18
|
|
|
16
|
|
|
28
|
|
|
25
|
|
Total operating
revenue
|
418
|
|
|
408
|
|
|
821
|
|
|
791
|
|
Operating
expense
|
|
|
|
|
|
|
|
Plant operating
expense
|
314
|
|
|
300
|
|
|
629
|
|
|
589
|
|
Other operating
expense
|
19
|
|
|
26
|
|
|
31
|
|
|
37
|
|
General and
administrative expense
|
25
|
|
|
23
|
|
|
48
|
|
|
51
|
|
Depreciation and
amortization expense
|
51
|
|
|
50
|
|
|
103
|
|
|
98
|
|
Impairment charges
(a)
|
4
|
|
|
24
|
|
|
19
|
|
|
24
|
|
Total operating
expense
|
413
|
|
|
423
|
|
|
830
|
|
|
799
|
|
Operating income
(loss)
|
5
|
|
|
(15)
|
|
|
(9)
|
|
|
(8)
|
|
Other
expense
|
|
|
|
|
|
|
|
Interest expense,
net
|
(34)
|
|
|
(33)
|
|
|
(68)
|
|
|
(68)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
Other expense,
net
|
2
|
|
|
1
|
|
|
—
|
|
|
(1)
|
|
Total other
expense
|
(32)
|
|
|
(34)
|
|
|
(68)
|
|
|
(71)
|
|
Loss before income
tax (expense) benefit and equity in net income
from unconsolidated investments
|
(27)
|
|
|
(49)
|
|
|
(77)
|
|
|
(79)
|
|
Income tax (expense)
benefit
|
(3)
|
|
|
40
|
|
|
7
|
|
|
30
|
|
Equity in net income
from unconsolidated investments
|
1
|
|
|
3
|
|
|
4
|
|
|
6
|
|
Net Loss
Attributable to Covanta Holding Corporation
|
$
|
(29)
|
|
|
$
|
(6)
|
|
|
$
|
(66)
|
|
|
$
|
(43)
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
129
|
|
|
132
|
|
|
129
|
|
|
132
|
|
Diluted
|
129
|
|
|
132
|
|
|
129
|
|
|
132
|
|
|
|
|
|
|
|
|
|
Loss Per
Share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.23)
|
|
|
$
|
(0.05)
|
|
|
$
|
(0.51)
|
|
|
$
|
(0.33)
|
|
Diluted
|
$
|
(0.23)
|
|
|
$
|
(0.05)
|
|
|
$
|
(0.51)
|
|
|
$
|
(0.33)
|
|
|
|
|
|
|
|
|
|
Cash Dividend
Declared Per Share
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
(a) For additional
information, see Exhibit 4 - Note (a) of this Press
Release.
|
Covanta Holding
Corporation
|
Exhibit 2
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
As
of
|
|
June 30,
2016
|
|
December 31,
2015
|
|
(Unaudited)
|
|
|
ASSETS
|
(In millions, except per share amounts)
|
Current:
|
|
|
|
Cash and cash
equivalents
|
$
|
108
|
|
|
$
|
94
|
|
Restricted funds held
in trust
|
65
|
|
|
77
|
|
Receivables (less
allowances of $8 million and $7 million, respectively)
|
298
|
|
|
312
|
|
Prepaid expenses and
other current assets
|
137
|
|
|
114
|
|
Assets held for
sale
|
—
|
|
|
97
|
|
Total Current
Assets
|
608
|
|
|
694
|
|
Property, plant and
equipment, net
|
2,958
|
|
|
2,690
|
|
Restricted funds held
in trust
|
73
|
|
|
83
|
|
Waste, service and
energy contract intangibles, net
|
274
|
|
|
284
|
|
Other intangible
assets, net
|
37
|
|
|
38
|
|
Goodwill
|
303
|
|
|
301
|
|
Other
assets
|
73
|
|
|
121
|
|
Total
Assets
|
$
|
4,326
|
|
|
$
|
4,211
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current:
|
|
|
|
Current portion of
long-term debt
|
$
|
9
|
|
|
$
|
8
|
|
Current portion of
project debt
|
25
|
|
|
16
|
|
Accounts
payable
|
59
|
|
|
90
|
|
Accrued expenses and
other current liabilities
|
265
|
|
|
234
|
|
Liabilities held for
sale
|
—
|
|
|
23
|
|
Total Current
Liabilities
|
358
|
|
|
371
|
|
Long-term
debt
|
2,390
|
|
|
2,255
|
|
Project
debt
|
331
|
|
|
159
|
|
Deferred income
taxes
|
574
|
|
|
595
|
|
Waste, service and
other contract intangibles, net
|
10
|
|
|
13
|
|
Other
liabilities
|
183
|
|
|
178
|
|
Total
Liabilities
|
3,846
|
|
|
3,571
|
|
Equity:
|
|
|
|
Covanta Holding
Corporation stockholders' equity:
|
|
|
|
Preferred stock
($0.10 par value; authorized 10 shares; none issued and
outstanding)
|
—
|
|
|
—
|
|
Common stock ($0.10
par value; authorized 250 shares; issued 136 shares,
outstanding 130 and 131 shares, respectively)
|
14
|
|
|
14
|
|
Additional paid-in
capital
|
800
|
|
|
801
|
|
Accumulated other
comprehensive loss
|
(48)
|
|
|
(34)
|
|
Accumulated
deficit
|
(285)
|
|
|
(143)
|
|
Treasury stock, at
par
|
(1)
|
|
|
—
|
|
Total Covanta Holding
Corporation stockholders' equity
|
480
|
|
|
638
|
|
Noncontrolling
interests in subsidiaries
|
—
|
|
|
2
|
|
Total
Equity
|
480
|
|
|
640
|
|
Total Liabilities
and Equity
|
$
|
4,326
|
|
|
$
|
4,211
|
|
|
|
|
|
Covanta Holding
Corporation
|
Exhibit 3
|
Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2016
|
|
2015
|
|
(Unaudited, in millions)
|
OPERATING
ACTIVITIES:
|
|
|
|
Net loss
|
$
|
(66)
|
|
|
$
|
(43)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expense
|
103
|
|
|
98
|
|
Impairment charges
(a)
|
19
|
|
|
24
|
|
Loss on
extinguishment of debt
|
—
|
|
|
2
|
|
Stock-based
compensation expense
|
9
|
|
|
11
|
|
Deferred income
taxes
|
(8)
|
|
|
(22)
|
|
Other, net
|
(2)
|
|
|
(2)
|
|
Change in restricted
funds held in trust
|
3
|
|
|
(1)
|
|
Change in working
capital, net of effects of acquisitions
|
—
|
|
|
(36)
|
|
Net cash provided by
operating activities
|
58
|
|
|
31
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Purchase of property,
plant and equipment
|
(184)
|
|
|
(195)
|
|
Acquisition of
business, net of cash acquired
|
(9)
|
|
|
(48)
|
|
Other, net
|
2
|
|
|
—
|
|
Net cash used in
investing activities
|
(191)
|
|
|
(243)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Proceeds from
borrowings on long-term debt
|
—
|
|
|
165
|
|
Proceeds from
borrowings on revolving credit facility
|
515
|
|
|
492
|
|
Proceeds from
equipment financing capital leases
|
—
|
|
|
15
|
|
Proceeds from
borrowings on project debt
|
—
|
|
|
59
|
|
Proceeds from Dublin
financing
|
77
|
|
|
45
|
|
Payments on long-term
debt
|
(1)
|
|
|
(163)
|
|
Payments of
borrowings on revolving credit facility
|
(370)
|
|
|
(286)
|
|
Payments of equipment
financing capital leases
|
(2)
|
|
|
(2)
|
|
Payments on project
debt
|
(9)
|
|
|
(57)
|
|
Payments of deferred
financing costs
|
(3)
|
|
|
(6)
|
|
Cash dividends paid
to stockholders
|
(65)
|
|
|
(66)
|
|
Change in restricted
funds held in trust
|
18
|
|
|
(6)
|
|
Common stock
repurchased
|
(20)
|
|
|
—
|
|
Other, net
|
3
|
|
|
5
|
|
Net cash provided by
financing activities
|
143
|
|
|
195
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
2
|
|
|
(3)
|
|
Net increase
(decrease) in cash and cash equivalents
|
12
|
|
|
(20)
|
|
Cash and cash
equivalents at beginning of period
|
96
|
|
|
91
|
|
Cash and cash
equivalents at end of period
|
108
|
|
|
71
|
|
Less: Cash and cash
equivalents of assets held for sale at end of period
|
—
|
|
|
5
|
|
Cash and cash
equivalents of continuing operations at end of period
|
$
|
108
|
|
|
$
|
66
|
|
|
|
|
|
(a) For additional
information, see Exhibit 4 - Note (a) of this Press
Release.
|
Covanta Holding
Corporation
|
Exhibit 4
|
Consolidated
Reconciliation of Net Loss and Net Cash Provided by Operating
Activities to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited, in millions)
|
Net Loss
Attributable to Covanta Holding Corporation
|
$
|
(29)
|
|
|
$
|
(6)
|
|
|
$
|
(66)
|
|
|
$
|
(43)
|
|
Depreciation and
amortization expense
|
51
|
|
|
50
|
|
|
103
|
|
|
98
|
|
Interest expense,
net
|
34
|
|
|
33
|
|
|
68
|
|
|
68
|
|
Income tax expense
(benefit)
|
3
|
|
|
(40)
|
|
|
(7)
|
|
|
(30)
|
|
Impairment charges
(a)
|
4
|
|
|
24
|
|
|
19
|
|
|
24
|
|
Loss on
extinguishment of debt
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Debt service billings
in excess of revenue recognized
|
1
|
|
|
—
|
|
|
2
|
|
|
1
|
|
Severance and
reorganization costs
|
1
|
|
|
—
|
|
|
2
|
|
|
2
|
|
Non-cash compensation
expense (b)
|
4
|
|
|
3
|
|
|
9
|
|
|
11
|
|
Capital type
expenditures at service fee operated facilities
(c)
|
12
|
|
|
14
|
|
|
23
|
|
|
22
|
|
Other
(d)
|
1
|
|
|
3
|
|
|
5
|
|
|
7
|
|
Total
adjustments
|
111
|
|
|
89
|
|
|
224
|
|
|
205
|
|
Adjusted
EBITDA
|
$
|
82
|
|
|
$
|
83
|
|
|
$
|
158
|
|
|
$
|
162
|
|
Cash paid for
interest, net of capitalized interest
|
(45)
|
|
|
(42)
|
|
|
(67)
|
|
|
(61)
|
|
Cash paid for
taxes
|
—
|
|
|
(2)
|
|
|
(4)
|
|
|
(4)
|
|
Capital type
expenditures at service fee operated facilities
(c)
|
(12)
|
|
|
(14)
|
|
|
(23)
|
|
|
(22)
|
|
Adjustment for
working capital and other
|
2
|
|
|
(36)
|
|
|
(6)
|
|
|
(44)
|
|
Net cash provided
by (used in) operating activities
|
$
|
27
|
|
|
$
|
(11)
|
|
|
$
|
58
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
(a)
|
During the three
months ended June 30, 2016, we recorded a non-cash impairment
totaling $4 million, of which $3 million related to an investment
in a joint venture to recover and recycle metals.
|
|
During the six months
ended June 30, 2016, we recorded non-cash impairment charges
totaling $19 million, of which $13 million was related to the
closure of our Pittsfield EfW facility in March 2017.
During the three
months ended June 30, 2015, we recorded a $24 million non-cash
impairment of our biomass assets.
|
(b)
|
The six months ended
June 30, 2015 includes $4 million of costs incurred in connection
with separation agreements related to the departure of two
executive officers.
|
(c)
|
Adjustment for impact
of adoption of FASB ASC 853 - Service Concession
Arrangements. These types of expenditures at our service
fee operated facilities were historically capitalized prior to
adoption of this new accounting standard effective January 1,
2015.
|
(d)
|
Includes certain
other items that are added back under the definition of Adjusted
EBITDA in Covanta Energy, LLC's credit agreement.
|
Covanta Holding
Corporation
|
Exhibit 5
|
Reconciliation of
Cash Flow Provided by Operating Activities to Free Cash
Flow
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
Full Year
Estimated 2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Unaudited, in millions)
|
|
|
Cash flow provided by
(used in) operating activities
|
$
|
27
|
|
|
$
|
(11)
|
|
|
$
|
58
|
|
|
$
|
31
|
|
|
$245 -
$295
|
Less: Maintenance
capital expenditures (a)
|
(32)
|
|
|
(29)
|
|
|
(68)
|
|
|
(55)
|
|
|
(105) -
(115)
|
Free Cash
Flow
|
$
|
(5)
|
|
|
$
|
(40)
|
|
|
$
|
(10)
|
|
|
$
|
(24)
|
|
|
$140 -
$180
|
|
|
|
|
|
|
|
|
|
|
Uses of Free Cash
Flow
|
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
Growth investments
(b)
|
$
|
(66)
|
|
|
$
|
(128)
|
|
|
$
|
(125)
|
|
|
$
|
(188)
|
|
|
|
Other investing
activities, net
|
2
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
|
Total
investments
|
$
|
(64)
|
|
|
$
|
(127)
|
|
|
$
|
(123)
|
|
|
$
|
(188)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return of capital to
stockholders:
|
|
|
|
|
|
|
|
|
|
Cash dividends paid
to stockholders
|
$
|
(32)
|
|
|
$
|
(33)
|
|
|
$
|
(65)
|
|
|
$
|
(66)
|
|
|
|
Common stock
repurchased
|
—
|
|
|
—
|
|
|
(20)
|
|
|
—
|
|
|
|
Total return of
capital to stockholders
|
$
|
(32)
|
|
|
$
|
(33)
|
|
|
$
|
(85)
|
|
|
$
|
(66)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital raising
activities:
|
|
|
|
|
|
|
|
|
|
Net proceeds from
issuance of corporate debt (c)
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
|
Net proceeds from
issuance of project debt (d)
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|
|
Proceeds from Dublin
financing
|
40
|
|
|
45
|
|
|
77
|
|
|
45
|
|
|
|
Proceeds from
equipment financing capital leases (e)
|
—
|
|
|
6
|
|
|
—
|
|
|
15
|
|
|
|
Change in restricted
funds held in trust
|
3
|
|
|
(15)
|
|
|
13
|
|
|
(11)
|
|
|
|
Other financing
activities, net
|
(2)
|
|
|
(1)
|
|
|
3
|
|
|
5
|
|
|
|
Deferred financing
costs
|
—
|
|
|
—
|
|
|
(3)
|
|
|
(3)
|
|
|
|
Net proceeds from
capital raising activities
|
$
|
41
|
|
|
$
|
52
|
|
|
$
|
90
|
|
|
$
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
repayments:
|
|
|
|
|
|
|
|
|
|
Net cash used for
scheduled principal payments on
corporate debt
|
$
|
(1)
|
|
|
$
|
(1)
|
|
|
$
|
(1)
|
|
|
$
|
(1)
|
|
|
|
Net cash used for
scheduled principal payments on
project debt (f)
|
—
|
|
|
(3)
|
|
|
(4)
|
|
|
(10)
|
|
|
|
Payments of equipment
financing capital leases (e)
|
(1)
|
|
|
(1)
|
|
|
(2)
|
|
|
(2)
|
|
|
|
Total debt
repayments
|
$
|
(2)
|
|
|
$
|
(5)
|
|
|
$
|
(7)
|
|
|
$
|
(13)
|
|
|
|
Borrowing
activities - Revolving credit facility,
net
|
$
|
64
|
|
|
$
|
157
|
|
|
$
|
145
|
|
|
$
|
206
|
|
|
|
Effect of exchange
rate changes on cash and cash
equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(3)
|
|
|
|
Net change in cash
and cash
equivalents
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
12
|
|
|
$
|
(20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Purchases of property, plant and
equipment are also referred to as capital expenditures. Capital
expenditures that primarily maintain existing facilities are
classified as maintenance capital expenditures. The following table
provides the components of total purchases of property, plant and
equipment:
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
Maintenance capital
expenditures
|
$
|
(32)
|
|
|
$
|
(29)
|
|
|
$
|
(68)
|
|
|
$
|
(55)
|
|
|
|
Capital expenditures
associated with organic growth
initiatives
|
(8)
|
|
|
(10)
|
|
|
(22)
|
|
|
(18)
|
|
|
|
Capital expenditures
associated with the New York City
contract
|
(2)
|
|
|
(6)
|
|
|
(3)
|
|
|
(19)
|
|
|
|
Capital expenditures
associated with Essex County EfW
emissions control system
|
(8)
|
|
|
(5)
|
|
|
(18)
|
|
|
(13)
|
|
|
|
Capital expenditures
associated with construction of
Dublin EfW facility
|
(48)
|
|
|
(59)
|
|
|
(73)
|
|
|
(90)
|
|
|
|
Total capital
expenditures associated with growth
investments
|
(66)
|
|
|
(80)
|
|
|
(116)
|
|
|
(140)
|
|
|
|
Total purchases of
property, plant and equipment
|
$
|
(98)
|
|
|
$
|
(109)
|
|
|
$
|
(184)
|
|
|
$
|
(195)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Growth
investments include investments in growth opportunities, including
organic growth initiatives, technology, business development, and
other similar expenditures.
|
Capital expenditures
associated with growth investments
|
$
|
(66)
|
|
|
$
|
(80)
|
|
|
$
|
(116)
|
|
|
$
|
(140)
|
|
|
|
Acquisition of
business, net of cash acquired
|
—
|
|
|
(48)
|
|
|
(9)
|
|
|
(48)
|
|
|
|
Total growth
investments
|
$
|
(66)
|
|
|
$
|
(128)
|
|
|
$
|
(125)
|
|
|
$
|
(188)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Excludes borrowings under Revolving
Credit Facility. Calculated as follows:
|
Proceeds from
borrowings on long-term debt
|
$
|
—
|
|
|
$
|
165
|
|
|
$
|
—
|
|
|
$
|
165
|
|
|
|
Refinanced long-term
debt
|
—
|
|
|
(162)
|
|
|
—
|
|
|
(162)
|
|
|
|
Less: Financing costs
related to issuance of long-term debt
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
|
Net proceeds from
issuance of corporate debt
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Calculated as
follows:
|
|
|
Proceeds from
borrowings on project debt
|
$
|
—
|
|
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
59
|
|
|
|
Refinanced project
debt
|
—
|
|
|
(42)
|
|
|
—
|
|
|
(42)
|
|
|
|
Less: Financing costs
related to the issuance of project debt
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
|
Net proceeds from
issuance of project debt
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) During
the six months ended June 30, 2015, we financed $15 million for
transportation equipment related to our contract with New York
City.
|
|
|
|
|
|
|
|
|
|
|
(f) Calculated
as follows:
|
Total scheduled
principal payments on project debt
|
$
|
(1)
|
|
|
$
|
(5)
|
|
|
$
|
(9)
|
|
|
$
|
(15)
|
|
|
|
Decrease in related
restricted funds held in trust
|
1
|
|
|
2
|
|
|
5
|
|
|
5
|
|
|
|
Net cash used for
principal payments on project debt
|
$
|
—
|
|
|
$
|
(3)
|
|
|
$
|
(4)
|
|
|
$
|
(10)
|
|
|
|
Covanta Holding
Corporation
|
Exhibit
6
|
Reconciliation of
Diluted Loss Per Share to Adjusted EPS
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited)
|
Diluted Loss Per
Share
|
$
|
(0.23)
|
|
|
$
|
(0.05)
|
|
|
$
|
(0.51)
|
|
|
$
|
(0.33)
|
|
Reconciling Items
(a)
|
0.01
|
|
|
(0.01)
|
|
|
0.10
|
|
|
0.14
|
|
Adjusted
EPS
|
$
|
(0.22)
|
|
|
$
|
(0.06)
|
|
|
$
|
(0.41)
|
|
|
$
|
(0.19)
|
|
|
|
|
|
|
|
|
|
(a) For details
related to the Reconciling Items, see Exhibit 6A of this Press
Release
|
Covanta Holding
Corporation
|
Exhibit 6A
|
Reconciling
Items
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited)
(In millions, except per share amounts)
|
Reconciling
Items
|
|
|
|
|
|
|
|
Impairment charges
(a)
|
$
|
4
|
|
|
$
|
24
|
|
|
$
|
19
|
|
|
$
|
24
|
|
Severance and
reorganization costs (b)
|
1
|
|
|
—
|
|
|
2
|
|
|
6
|
|
Loss on
extinguishment of debt
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Effect on income of
derivative instruments not designated as hedging
instruments
|
(3)
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Effect of foreign
exchange (gain) loss on indebtedness
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
1
|
|
Total Reconciling
Items, pre-tax
|
2
|
|
|
25
|
|
|
21
|
|
|
33
|
|
Pro forma income tax
impact (c)
|
(1)
|
|
|
(11)
|
|
|
(8)
|
|
|
(14)
|
|
Legal entity
restructuring charge
|
—
|
|
|
(15)
|
|
|
—
|
|
|
—
|
|
Total Reconciling
Items, net of tax
|
$
|
1
|
|
|
$
|
(1)
|
|
|
$
|
13
|
|
|
$
|
19
|
|
Diluted Earnings
Per Share Impact
|
$
|
0.01
|
|
|
$
|
(0.01)
|
|
|
$
|
0.10
|
|
|
$
|
0.14
|
|
Weighted Average
Diluted Shares Outstanding
|
129
|
|
|
132
|
|
|
129
|
|
|
132
|
|
|
|
|
|
|
|
|
|
(a) For additional
information, see Exhibit 4 - Note (a) of this Press
Release.
|
(b) For the six
months ended June 30, 2015, comprised of costs incurred in
connection with separation agreements related to the departure of
two executive officers, of which $4 million related to non-cash
compensation.
|
(c) We calculate the
federal and state tax impact of each item using the statutory
federal tax rate and applicable blended state rate.
|
Covanta Holding
Corporation
|
Exhibit 7A
|
Supplemental
Information on Operations (a)
|
|
(Unaudited, $ in
millions)
|
|
|
Three Months Ended
June 30, 2016
|
|
North
America
|
|
|
|
|
|
EfW
|
|
Other
|
|
Total
|
|
Other
|
|
Consolidated
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Waste and
service:
|
|
|
|
|
|
|
|
|
|
Waste processing
& handling
|
$
|
238
|
|
|
$
|
32
|
|
|
$
|
270
|
|
|
$
|
—
|
|
|
$
|
270
|
|
Debt
service
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Other
revenue
|
3
|
|
|
22
|
|
|
25
|
|
|
—
|
|
|
25
|
|
Total waste and
service
|
243
|
|
|
54
|
|
|
297
|
|
|
—
|
|
|
297
|
|
Energy:
|
|
|
|
|
|
|
|
|
|
Energy
sales
|
76
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
76
|
|
Capacity
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
Total energy
revenue
|
86
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
Recycled
metals:
|
|
|
|
|
|
|
|
|
|
Ferrous
|
8
|
|
|
3
|
|
|
11
|
|
|
—
|
|
|
11
|
|
Non-ferrous
|
5
|
|
|
1
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Total recycled
metals
|
13
|
|
|
4
|
|
|
17
|
|
|
—
|
|
|
17
|
|
Other
revenue
|
—
|
|
|
18
|
|
|
18
|
|
|
—
|
|
|
18
|
|
Total
revenue
|
$
|
342
|
|
|
$
|
76
|
|
|
$
|
418
|
|
|
$
|
—
|
|
|
$
|
418
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
|
Plant operating
expense:
|
|
|
|
|
|
|
|
|
|
Plant
maintenance
|
$
|
80
|
|
|
$
|
2
|
|
|
$
|
82
|
|
|
$
|
—
|
|
|
$
|
82
|
|
Other plant operating
expense
|
165
|
|
|
66
|
|
|
231
|
|
|
1
|
|
|
232
|
|
Total plant operating
expense
|
245
|
|
|
68
|
|
|
313
|
|
|
1
|
|
|
314
|
|
Other operating
expense
|
1
|
|
|
18
|
|
|
19
|
|
|
—
|
|
|
19
|
|
General and
administrative
|
—
|
|
|
24
|
|
|
24
|
|
|
1
|
|
|
25
|
|
Depreciation and
amortization
|
42
|
|
|
9
|
|
|
51
|
|
|
—
|
|
|
51
|
|
Impairment
charges
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Total operating
expense
|
$
|
288
|
|
|
$
|
123
|
|
|
$
|
411
|
|
|
$
|
2
|
|
|
$
|
413
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
$
|
54
|
|
|
$
|
(47)
|
|
|
$
|
7
|
|
|
$
|
(2)
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income (Loss) excluding
Impairment charges
|
$
|
54
|
|
|
$
|
(43)
|
|
|
$
|
11
|
|
|
$
|
(2)
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
|
(a) Supplemental
information provided in order to present the financial performance
of our North America EfW operations. "Other" within our North
America segment includes all non-EfW operations, including transfer
stations, landfills, e-waste, biomass facilities, construction and
corporate overhead. This information is provided as supplemental
detail only and is not intended to replace our North America
reporting segment.
|
|
Note: Certain amounts
may not total due to rounding
|
Covanta Holding
Corporation
|
Exhibit 7B
|
Supplemental
Information on Operations (a)
|
|
(Unaudited, $ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2015
|
|
North
America
|
|
|
|
|
|
EfW
|
|
Other
|
|
Total
|
|
Other
|
|
Consolidated
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Waste and
service:
|
|
|
|
|
|
|
|
|
|
Waste processing
& handling
|
$
|
231
|
|
|
$
|
28
|
|
|
$
|
259
|
|
|
$
|
—
|
|
|
$
|
259
|
|
Debt
service
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Other
revenue
|
3
|
|
|
9
|
|
|
12
|
|
|
1
|
|
|
13
|
|
Total waste and
service
|
238
|
|
|
37
|
|
|
275
|
|
|
1
|
|
|
276
|
|
Energy:
|
|
|
|
|
|
|
|
|
|
Energy
sales
|
73
|
|
|
7
|
|
|
80
|
|
|
9
|
|
|
89
|
|
Capacity
|
9
|
|
|
1
|
|
|
10
|
|
|
—
|
|
|
10
|
|
Total energy
revenue
|
82
|
|
|
8
|
|
|
90
|
|
|
9
|
|
|
99
|
|
Recycled
metals:
|
|
|
|
|
|
|
|
|
|
Ferrous
|
9
|
|
|
2
|
|
|
11
|
|
|
—
|
|
|
11
|
|
Non-ferrous
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Total recycled
metals
|
15
|
|
|
2
|
|
|
17
|
|
|
—
|
|
|
17
|
|
Other
revenue
|
—
|
|
|
17
|
|
|
17
|
|
|
(1)
|
|
|
16
|
|
Total
revenue
|
$
|
335
|
|
|
$
|
64
|
|
|
$
|
399
|
|
|
$
|
9
|
|
|
$
|
408
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
|
Plant operating
expense:
|
|
|
|
|
|
|
|
|
|
Plant
maintenance
|
$
|
81
|
|
|
$
|
4
|
|
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
85
|
|
Other plant operating
expense
|
155
|
|
|
52
|
|
|
207
|
|
|
8
|
|
|
215
|
|
Total plant
operating expense
|
236
|
|
|
56
|
|
|
292
|
|
|
8
|
|
|
300
|
|
Other operating
expense
|
—
|
|
|
27
|
|
|
27
|
|
|
(1)
|
|
|
26
|
|
General and
administrative
|
—
|
|
|
20
|
|
|
20
|
|
|
3
|
|
|
23
|
|
Depreciation and
amortization
|
40
|
|
|
8
|
|
|
48
|
|
|
2
|
|
|
50
|
|
Impairment
charges
|
—
|
|
|
24
|
|
|
24
|
|
|
—
|
|
|
24
|
|
Total operating
expense
|
$
|
276
|
|
|
$
|
135
|
|
|
$
|
411
|
|
|
$
|
12
|
|
|
$
|
423
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
$
|
59
|
|
|
$
|
(71)
|
|
|
$
|
(12)
|
|
|
$
|
(3)
|
|
|
$
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income (Loss) excluding
Impairment charges:
|
$
|
59
|
|
|
$
|
(47)
|
|
|
$
|
12
|
|
|
$
|
(3)
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
|
(a) Supplemental
information provided in order to present the financial performance
of our North America EfW operations. "Other" within our North
America segment includes all non-EfW operations, including transfer
stations, landfills, e-waste, biomass facilities, construction and
corporate overhead. This information is provided as supplemental
detail only and is not intended to replace our North America
reporting segment.
|
|
Note: Certain amounts
may not total due to rounding
|
North America
EfW
|
Exhibit
8
|
Revenue and
Operating Income Changes - Q2 2015 to Q2 2016
|
|
|
|
(Unaudited, $ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store
(a)
|
|
Contract
Transitions(b)
|
|
|
|
|
|
|
|
|
Q2
2015
|
|
Price
|
|
%
|
|
Volume
|
|
%
|
|
Total
|
|
%
|
|
Waste
|
|
PPA
|
|
Transactions(c)
|
|
Total
Changes
|
|
Q2
2016
|
Waste and
service:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste
processing
|
|
$
|
231
|
|
|
$
|
5
|
|
|
2.1
|
%
|
|
$
|
—
|
|
|
0.1
|
%
|
|
$
|
5
|
|
|
2.1
|
%
|
|
$
|
(1)
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
7
|
|
|
$
|
238
|
|
Debt
service
|
|
4
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
2
|
|
Other
revenue
|
|
3
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Total waste and
service
|
|
238
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
1.8
|
%
|
|
(2)
|
|
|
—
|
|
|
2
|
|
|
5
|
|
|
243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
sales
|
|
73
|
|
|
(2)
|
|
|
-3.1
|
%
|
|
(1)
|
|
|
-1.7
|
%
|
|
(4)
|
|
|
-4.9
|
%
|
|
6
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
76
|
|
Capacity
|
|
9
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
1.1
|
%
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
10
|
|
Total energy
revenue
|
|
82
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
-4.3
|
%
|
|
7
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recycled
metals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
|
9
|
|
|
(3)
|
|
|
-30.2
|
%
|
|
1
|
|
|
8.3
|
%
|
|
(2)
|
|
|
-21.9
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
8
|
|
Non-ferrous
|
|
6
|
|
|
(1)
|
|
|
-13.4
|
%
|
|
1
|
|
|
9.8
|
%
|
|
—
|
|
|
-3.7
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
5
|
|
Total recycled
metals
|
|
15
|
|
|
(4)
|
|
|
-23.7
|
%
|
|
1
|
|
|
8.9
|
%
|
|
(2)
|
|
|
-14.9
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
13
|
|
Total
revenue
|
|
$
|
335
|
|
|
|
|
|
|
|
|
|
|
$
|
(1)
|
|
|
-0.4
|
%
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant operating
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant
maintenance
|
|
$
|
81
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1)
|
|
|
$
|
80
|
|
Other plant
operating
expense
|
|
155
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
3.3
|
%
|
|
2
|
|
|
—
|
|
|
2
|
|
|
10
|
|
|
165
|
|
Total plant
operating
expense
|
|
236
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
2.2
|
%
|
|
2
|
|
|
—
|
|
|
2
|
|
|
9
|
|
|
245
|
|
Other operating
expense
|
|
—
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
Depreciation
and
amortization
|
|
40
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
42
|
|
Total
operating
expense
|
|
$
|
276
|
|
|
|
|
|
|
|
|
|
|
$
|
8
|
|
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
12
|
|
|
$
|
288
|
|
Operating
Income
(Loss)
|
|
$
|
59
|
|
|
|
|
|
|
|
|
|
|
$
|
(10)
|
|
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(5)
|
|
|
$
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Reflects the
performance at each facility on a comparable period-over-period
basis, excluding the impacts of transitions and
transactions.
|
(b) Includes the
impact of the expiration of: (1) long-term major waste and service
contracts, most typically representing the transition to a new
contract structure, and (2) long-term energy contracts.
|
(c) Includes the
impacts of acquisitions, divestitures and the addition or loss of
operating contracts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Excludes
Impairment charges
|
|
|
|
Note: Certain amounts
may not total due to rounding
|
|
|
|
|
|
|
North
America
|
Exhibit 9
|
Operating Metrics
(Unaudited)
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
EfW
Waste
|
|
|
|
|
|
|
|
Tons: (in
millions)
|
|
|
|
Contracted
|
4.4
|
|
|
4.4
|
|
Uncontracted
|
0.5
|
|
|
0.5
|
|
Total Tons
|
4.9
|
|
|
4.9
|
|
|
|
|
|
Revenue per
Ton:
|
|
|
|
Contracted
|
$
|
45.87
|
|
|
$
|
44.72
|
|
Uncontracted
|
$
|
74.94
|
|
|
$
|
70.10
|
|
Average Revenue per
Ton
|
$
|
48.71
|
|
|
$
|
47.29
|
|
|
|
|
|
EfW
Energy
|
|
|
|
Energy Sales: (MWh in
millions)
|
|
|
|
Contracted
|
0.9
|
|
|
0.8
|
|
Hedged
|
0.4
|
|
|
0.3
|
|
Market
|
0.2
|
|
|
0.4
|
|
Total Energy
Sales
|
1.5
|
|
|
1.4
|
|
|
|
|
|
Market Sales by
Geography:
|
|
|
|
PJM East
|
0.1
|
|
|
0.1
|
|
NEPOOL
|
—
|
|
|
0.1
|
|
NYISO
|
—
|
|
|
—
|
|
Other
|
0.1
|
|
|
0.1
|
|
|
|
|
|
Revenue per MWh
(excludes capacity):
|
|
|
|
Contracted
|
$
|
62.06
|
|
|
$
|
63.69
|
|
Hedged
|
$
|
37.19
|
|
|
$
|
42.07
|
|
Market
|
$
|
26.02
|
|
|
$
|
31.43
|
|
Average Revenue per
MWh
|
$
|
49.25
|
|
|
$
|
50.81
|
|
|
|
|
|
Metals
|
|
|
|
Tons Sold: (in
thousands)
|
|
|
|
Ferrous
|
77
|
|
|
85
|
|
Non-Ferrous
|
9
|
|
|
8
|
|
|
|
|
|
Revenue per
Ton:
|
|
|
|
Ferrous
|
$
|
138
|
|
|
$
|
127
|
|
Non-Ferrous
|
$
|
650
|
|
|
$
|
741
|
|
|
|
|
|
EfW Plant
Operating Expense ($ in millions)
|
|
|
|
Plant Operating
Expense - Gross
|
$
|
255
|
|
|
$
|
248
|
|
Less: Client
pass-through costs
|
(9)
|
|
|
(11)
|
|
Less: REC sales -
contra expense
|
(1)
|
|
|
(1)
|
|
Plant Operating
Expense - Reported
|
$
|
245
|
|
|
$
|
236
|
|
Client pass-throughs
as % of gross
costs
|
3.6
|
%
|
|
4.4
|
%
|
|
|
|
|
Note: Waste volume
includes solid tons only. Metals and energy volume are presented
net of client revenue sharing. Steam sales are converted to MWh
equivalent at an assumed average rate of 11 klbs of steam /
MWh. Uncontracted energy sales include sales under PPAs that
are based on market prices.
|
|
Note: Certain amounts
may not total due to rounding
|
Discussion of Non-GAAP Financial Measures
We use a number of different financial measures, both
United States generally accepted
accounting principles ("GAAP") and non-GAAP, in assessing the
overall performance of our business. To supplement our assessment
of results prepared in accordance with GAAP, we use the measures of
Adjusted EBITDA, Free Cash Flow, and Adjusted EPS, which are
non-GAAP measures as defined by the Securities and Exchange
Commission. The non-GAAP financial measures of Adjusted EBITDA,
Free Cash Flow, and Adjusted EPS as described below, and used in
the tables above, are not intended as a substitute or as an
alternative to net income, cash flow provided by operating
activities or diluted earnings per share as indicators of our
performance or liquidity or any other measures of performance or
liquidity derived in accordance with GAAP. In addition, our
non-GAAP financial measures may be different from non-GAAP measures
used by other companies, limiting their usefulness for comparison
purposes.
The presentations of Adjusted EBITDA, Free Cash Flow and
Adjusted EPS are intended to enhance the usefulness of our
financial information by providing measures which management
internally use to assess and evaluate the overall performance of
its business and those of possible acquisition candidates, and
highlight trends in the overall business.
Adjusted EBITDA
We use Adjusted EBITDA to provide further information that is
useful to an understanding of the financial covenants contained in
the credit facilities as of June 30, 2016 of our most
significant subsidiary, Covanta Energy, LLC, ("Covanta Energy"),
through which we conduct our core waste and energy services
business, and as additional ways of viewing aspects of its
operations that, when viewed with the GAAP results and the
accompanying reconciliations to corresponding GAAP financial
measures, provide a more complete understanding of our core
business. The calculation of Adjusted EBITDA is based on the
definition in Covanta Energy's credit facilities as of
June 30, 2016, which we have guaranteed. Adjusted EBITDA is
defined as earnings before interest, taxes, depreciation and
amortization, as adjusted for additional items subtracted from or
added to net income. Because our business is substantially
comprised of that of Covanta Energy, our financial performance is
substantially similar to that of Covanta Energy. For this reason,
and in order to avoid use of multiple financial measures which are
not all from the same entity, the calculation of Adjusted EBITDA
and other financial measures presented herein are ours, measured on
a consolidated basis.
Under the credit facilities as of June 30, 2016, Covanta
Energy is required to satisfy certain financial covenants,
including certain ratios of which Adjusted EBITDA is an important
component. Compliance with such financial covenants is expected to
be the principal limiting factor which will affect our ability to
engage in a broad range of activities in furtherance of our
business, including making certain investments, acquiring
businesses and incurring additional debt. Covanta Energy was in
compliance with these covenants as of June 30, 2016. Failure
to comply with such financial covenants could result in a default
under these credit facilities, which default would have a material
adverse affect on our financial condition and liquidity.
These financial covenants are measured on a trailing four
quarter period basis and the material covenants are as follows:
- maximum Covanta Energy leverage ratio of 4.00 to 1.00, which
measures Covanta Energy's Consolidated Adjusted Debt (which is the
principal amount of its consolidated debt less certain restricted
funds dedicated to repayment of project debt principal and
construction costs) to its Adjusted EBITDA (which for purposes of
calculating the leverage ratio and interest coverage ratio, is
adjusted on a pro forma basis for acquisitions and dispositions
made during the relevant period); and
- minimum Covanta Energy interest coverage ratio of 3.00 to 1.00,
which measures Covanta Energy's Adjusted EBITDA to its consolidated
interest expense plus certain interest expense of ours, to the
extent paid by Covanta Energy.
In order to provide a meaningful basis for comparison, we are
providing information with respect to our Adjusted EBITDA for the
three and six months ended June 30, 2016 and 2015, reconciled
for each such period to net income and cash flow provided by
operating activities, which are believed to be the most directly
comparable measures under GAAP.
Our projected full year 2016 Adjusted EBITDA is not based on
GAAP net income/loss and is anticipated to be adjusted to exclude
the effects of events or circumstances in 2016 that are not
representative or indicative of our results of operations.
Projected GAAP net income/loss for the full year would require
inclusion of the projected impact of future excluded items,
including items that are not currently determinable, but may be
significant, such as asset impairments and one-time items, charges,
gains or losses from divestitures, or other items. Due to the
uncertainty of the likelihood, amount and timing of any such items,
we do not have information available to provide a quantitative
reconciliation of full year 2016 projected net income/loss to an
Adjusted EBITDA projection.
Free Cash Flow
Free Cash Flow is defined as cash flow provided by operating
activities, less maintenance capital expenditures, which are
capital expenditures primarily to maintain our existing facilities.
We use the non-GAAP measure of Free Cash Flow as a criterion of
liquidity and performance-based components of employee
compensation. We use Free Cash Flow as a measure of liquidity to
determine amounts we can reinvest in our core businesses, such as
amounts available to make acquisitions, invest in construction of
new projects, make principal payments on debt, or amounts we can
return to our stockholders through dividends and/or stock
repurchases.
In order to provide a meaningful basis for comparison, we are
providing information with respect to our Free Cash Flow for the
three and six months ended June 30, 2016 and 2015, reconciled
for each such period to cash flow provided by operating activities,
which we believe to be the most directly comparable measure under
GAAP.
Adjusted EPS
Adjusted EPS excludes certain income and expense items that are
not representative of our ongoing business and operations, which
are included in the calculation of Diluted Earnings Per Share in
accordance with GAAP. The following items are not all-inclusive,
but are examples of reconciling items in prior comparative and
future periods. They would include impairment charges, the effect
of derivative instruments not designated as hedging instruments,
significant gains or losses from the disposition or restructuring
of businesses, gains and losses on assets held for sale,
transaction-related costs, income and loss on the extinguishment of
debt and other significant items that would not be representative
of our ongoing business.
We will use the non-GAAP measure of Adjusted EPS to enhance the
usefulness of our financial information by providing a measure
which management internally uses to assess and evaluate the overall
performance and highlight trends in the ongoing business.
In order to provide a meaningful basis for comparison, we are
providing information with respect to our Adjusted EPS for the
three and six months ended June 30, 2016 and 2015, reconciled
for each such period to diluted income per share, which is believed
to be the most directly comparable measure under GAAP.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain statements in this press release
constitute "forward-looking" statements as defined in Section 27A
of the Securities Act of 1933 (the "Securities Act"), Section 21E
of the Securities Exchange Act of 1934 (the "Exchange Act"), the
Private Securities Litigation Reform Act of 1995 (the "PSLRA") or
in releases made by the Securities and Exchange Commission ("SEC"),
all as may be amended from time to time. Such forward-looking
statements involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance
or achievements of Covanta Holding Corporation and its subsidiaries
("Covanta") or industry results, to differ materially from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Statements that are not historical
fact are forward-looking statements. Forward-looking statements can
be identified by, among other things, the use of forward-looking
language, such as the words "plan," "believe," "expect,"
"anticipate," "intend," "estimate," "project," "may," "will,"
"would," "could," "should," "seeks," or "scheduled to," or other
similar words, or the negative of these terms or other variations
of these terms or comparable language, or by discussion of strategy
or intentions. These cautionary statements are being made pursuant
to the Securities Act, the Exchange Act and the PSLRA with the
intention of obtaining the benefits of the "safe harbor" provisions
of such laws. Covanta cautions investors that any forward-looking
statements made by us are not guarantees or indicative of future
performance. Important factors, risks and uncertainties that could
cause actual results to differ materially from those
forward-looking statements include, but are not limited to:
- seasonal or long-term fluctuations in the prices of energy,
waste disposal, scrap metal and commodities, and our ability to
renew or replace expiring contracts at comparable pricing;
- adoption of new laws and regulations in the United States and abroad, including energy
laws, environmental laws, labor laws and healthcare laws;
- our ability to avoid adverse publicity relating to our business
expansion efforts;
- advances in technology;
- difficulties in the operation of our facilities, including fuel
supply and energy delivery interruptions, failure to obtain
regulatory approvals, equipment failures, labor disputes and work
stoppages, and weather interference and catastrophic events;
- failure to maintain historical performance levels at our
facilities and our ability to retain the rights to operate
facilities we do not own;
- difficulties in the financing, development and construction of
new projects and expansions, including increased construction costs
and delays;
- our ability to realize the benefits of long-term business
development and bear the costs of business development over
time;
- our ability to utilize net operating loss carryforwards;
- limits of insurance coverage;
- our ability to avoid defaults under our long-term
contracts;
- performance of third parties under our contracts and such third
parties' observance of laws and regulations;
- concentration of suppliers and customers;
- geographic concentration of facilities;
- increased competitiveness in the energy and waste
industries;
- changes in foreign currency exchange rates;
- limitations imposed by our existing indebtedness and our
ability to perform our financial obligations and guarantees and to
refinance our existing indebtedness;
- exposure to counterparty credit risk and instability of
financial institutions in connection with financing
transactions;
- the scalability of our business;
- restrictions in our certificate of incorporation and debt
documents regarding strategic alternatives;
- failures of disclosure controls and procedures and internal
controls over financial reporting;
- our ability to attract and retain talented people;
- general economic conditions in the
United States and abroad, including the availability of
credit and debt financing; and
- other risks and uncertainties affecting our businesses
described in Item 1A. Risk Factors of Covanta's Annual Report on
Form 10-K for the year ended December 31,
2015 and in other filings by Covanta with the SEC.
Although we believe that our plans, intentions and expectations
reflected in or suggested by such forward-looking statements are
reasonable, actual results could differ materially from a
projection or assumption in any of our forward-looking statements.
Our future financial condition and results of operations, as well
as any forward-looking statements, are subject to change and
inherent risks and uncertainties. The forward-looking statements
contained in this press release are made only as of the date hereof
and we do not have, or undertake, any obligation to update or
revise any forward-looking statements whether as a result of new
information, subsequent events or otherwise, unless otherwise
required by law.
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SOURCE Covanta Holding Corporation