MORRISTOWN, N.J., Oct. 25,
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 nine months ended September 30, 2016.
|
Three Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
(Unaudited, $ in
millions, except per share amounts)
|
Revenue
|
$421
|
|
$422
|
Net Income
|
$54
|
|
$34
|
Adjusted
EBITDA
|
$124
|
|
$139
|
Cash flow provided by
operating activities
|
$88
|
|
$123
|
Free Cash
Flow
|
$74
|
|
$107
|
Diluted Earnings Per
Share
|
$0.42
|
|
$0.25
|
Adjusted
EPS
|
$0.18
|
|
$0.22
|
Reconciliations of
non-GAAP measures can be found in the exhibits to this press
release.
|
"Our waste business continues to grow, benefiting from strong
market conditions and demand for our environmental solutions
offerings," stated Stephen J. Jones,
Covanta's President and CEO. "Overall, operating performance
is on track with the plan we laid out in the beginning of the
year. In addition, construction of the Dublin EfW facility is
now over 75% complete, and this quarter we signed the remaining
waste supply contracts to secure 90% of the facility's
capacity. We look forward to moving into commercial
operations by the end of Q3 2017."
Third Quarter Results
For the three months ended
September 30, 2016, total revenue decreased by $1 million to $421
million from $422 million in
Q3 2015. An increase in waste and service revenue was
offset by decreases in metals and energy revenue.
Same store North America EfW revenue increased by $6 million as follows:
- waste and service revenue increased by $8 million, driven by price and volume
improvements of $6 million and
$2 million, respectively;
- energy revenue increased by $1
million, with higher prices and capacity revenue
offsetting lower production volume; and
- recycled metals revenue decreased by $3
million, primarily driven by lower market prices.
Also within North America EfW revenue, contract transitions
resulted in an increase of $4 million
due to additional energy revenue sharing partially offset by the
expiration of an above-market power purchase agreement.
All other revenue (non-EfW operations) decreased by $15 million on a consolidated basis. Energy
revenue from non-EfW operations decreased by $22 million, representing the contribution from
biomass facilities and China
operations in the prior year. This was partially offset by a
$6 million increase in waste and
service revenue primarily from newly acquired environmental
solutions businesses.
Operating expense increased by $13
million to $361 million. The
year-over-year increase was primarily due to:
- an $11 million increase in North
America EfW plant operating expense driven by the Durham-York
facility coming online and same store cost escalation;
- an $8 million increase in
North America segment non-EfW
plant operating expense, primarily related to operations in our
newly acquired environmental solutions businesses and higher
accruals for employee incentive compensation, partially offset by
shutting down remaining biomass facilities; and
- a $7 million decrease in plant
operating expense outside the North
America segment due to the exchange of ownership interests
in EfW facilities located in China.
Adjusted EBITDA declined by $15
million on a year-over-year basis to $124 million, driven primarily by the
China transaction and increased
accrual for employee incentive compensation.
Free Cash Flow decreased by $33
million to $74 million,
primarily as a result of lower Adjusted EBITDA and working
capital.
Adjusted EPS decreased by $0.04 to
$0.18. The decrease was driven
primarily by the China transaction
and increased accrual for employee incentive compensation.
Shareholder Returns
During the quarter, the Company
declared a regular cash dividend of $0.25 per share, totaling $33 million.
2016 Guidance
The Company is reaffirming its guidance
for 2016 for the following key
metrics:
(In
millions)
|
|
|
Metric
|
2015
Actual
|
2016
Guidance Range(1)
|
Adjusted
EBITDA
|
$
428
|
$390 -
$430
|
Free Cash
Flow
|
$
147
|
$140 -
$180
|
(1) For
additional information on the reconciliation of Free Cash Flow to
Cash flow provided by 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, October 26, 2016 to
discuss its third quarter 2016 results. The conference call will
begin with prepared remarks, which will be followed by a question
and answer session. To participate, please dial
1-844-887-9404 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
1-412-317-9257. 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) November 2, 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 10093874. 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited)
(In millions, except per share amounts)
|
Operating
revenue
|
|
|
|
|
|
|
|
Waste and service
revenue
|
$
|
299
|
|
$
|
283
|
|
$
|
875
|
|
$
|
805
|
Energy
revenue
|
92
|
|
108
|
|
279
|
|
319
|
Recycled metals
revenue
|
14
|
|
16
|
|
44
|
|
49
|
Other operating
revenue
|
16
|
|
15
|
|
44
|
|
40
|
Total operating
revenue
|
421
|
|
422
|
|
1,242
|
|
1,213
|
Operating
expense
|
|
|
|
|
|
|
|
Plant operating
expense
|
272
|
|
260
|
|
901
|
|
849
|
Other operating
expense
|
14
|
|
18
|
|
45
|
|
55
|
General and
administrative expense
|
23
|
|
20
|
|
71
|
|
71
|
Depreciation and
amortization expense
|
52
|
|
50
|
|
155
|
|
148
|
Impairment charges
(a)
|
—
|
|
—
|
|
19
|
|
24
|
Total operating
expense
|
361
|
|
348
|
|
1,191
|
|
1,147
|
Operating
income
|
60
|
|
74
|
|
51
|
|
66
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest expense,
net
|
(35)
|
|
(34)
|
|
(103)
|
|
(102)
|
Gain on asset sales
(a)
|
43
|
|
—
|
|
43
|
|
—
|
Loss on
extinguishment of debt
|
—
|
|
—
|
|
—
|
|
(2)
|
Other expense,
net
|
(1)
|
|
—
|
|
(1)
|
|
(1)
|
Total other income
(expense)
|
7
|
|
(34)
|
|
(61)
|
|
(105)
|
|
|
|
|
|
|
|
|
Income (loss)
before income tax (expense) benefit and equity in net
(loss) income from unconsolidated investments
|
67
|
|
40
|
|
(10)
|
|
(39)
|
Income tax (expense)
benefit
|
(12)
|
|
(11)
|
|
(5)
|
|
19
|
Equity in net (loss)
income from unconsolidated investments
|
(1)
|
|
5
|
|
3
|
|
11
|
Net Income (Loss)
Attributable to Covanta Holding Corporation
|
$
|
54
|
|
$
|
34
|
|
$
|
(12)
|
|
$
|
(9)
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
129
|
|
132
|
|
129
|
|
132
|
Diluted
|
131
|
|
134
|
|
129
|
|
132
|
|
|
|
|
|
|
|
|
Income (Loss) Per
Share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.42
|
|
$
|
0.26
|
|
$
|
(0.09)
|
|
$
|
(0.07)
|
Diluted
|
$
|
0.42
|
|
$
|
0.25
|
|
$
|
(0.09)
|
|
$
|
(0.07)
|
|
|
|
|
|
|
|
|
Cash Dividend
Declared Per Share
|
$
|
0.25
|
|
$
|
0.25
|
|
$
|
0.75
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
(a) For additional
information, see Exhibit 4 of this Press Release.
|
Covanta Holding
Corporation
|
Exhibit 2
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
(Unaudited)
|
|
|
ASSETS
|
(In millions, except per share amounts)
|
Current:
|
|
|
|
Cash and cash
equivalents
|
$
|
113
|
|
|
$
|
94
|
|
Restricted funds held
in trust
|
62
|
|
|
77
|
|
Receivables (less
allowances of $9 million and $7 million, respectively)
|
299
|
|
|
312
|
|
Prepaid expenses and
other current assets
|
73
|
|
|
114
|
|
Assets held for
sale
|
—
|
|
|
97
|
|
Total Current
Assets
|
547
|
|
|
694
|
|
Property, plant and
equipment, net
|
2,997
|
|
|
2,690
|
|
Restricted funds held
in trust
|
57
|
|
|
83
|
|
Waste, service and
energy contract intangibles, net
|
269
|
|
|
284
|
|
Other intangible
assets, net
|
35
|
|
|
38
|
|
Goodwill
|
303
|
|
|
301
|
|
Other
assets
|
67
|
|
|
121
|
|
Total
Assets
|
$
|
4,275
|
|
|
$
|
4,211
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current:
|
|
|
|
Current portion of
long-term debt
|
$
|
9
|
|
|
$
|
8
|
|
Current portion of
project debt
|
23
|
|
|
16
|
|
Accounts
payable
|
52
|
|
|
90
|
|
Accrued expenses and
other current liabilities
|
234
|
|
|
234
|
|
Liabilities held for
sale
|
—
|
|
|
23
|
|
Total Current
Liabilities
|
318
|
|
|
371
|
|
Long-term
debt
|
2,286
|
|
|
2,255
|
|
Project
debt
|
381
|
|
|
159
|
|
Deferred income
taxes
|
595
|
|
|
595
|
|
Waste, service and
other contract intangibles, net
|
8
|
|
|
13
|
|
Other
liabilities
|
187
|
|
|
178
|
|
Total Liabilities
|
3,775
|
|
|
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, respectively)
|
14
|
|
|
14
|
|
Additional paid-in
capital
|
804
|
|
|
801
|
|
Accumulated other
comprehensive loss
|
(53)
|
|
|
(34)
|
|
Accumulated
deficit
|
(264)
|
|
|
(143)
|
|
Treasury stock, at
par
|
(1)
|
|
|
—
|
|
Total Covanta Holding
Corporation stockholders' equity
|
500
|
|
|
638
|
|
Noncontrolling
interests in subsidiaries
|
—
|
|
|
2
|
|
Total
Equity
|
500
|
|
|
640
|
|
Total Liabilities
and Equity
|
$
|
4,275
|
|
|
$
|
4,211
|
|
|
|
|
|
Covanta Holding
Corporation
|
Exhibit 3
|
Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2016
|
|
2015
|
|
(Unaudited, in millions)
|
OPERATING
ACTIVITIES:
|
|
|
|
Net loss
|
$
|
(12)
|
|
|
$
|
(9)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expense
|
155
|
|
|
148
|
|
Impairment charges
(a)
|
19
|
|
|
24
|
|
Gain on asset sales
(a)
|
(43)
|
|
|
—
|
|
Loss on
extinguishment of debt
|
—
|
|
|
2
|
|
Stock-based
compensation expense
|
13
|
|
|
15
|
|
Deferred income
taxes
|
3
|
|
|
(22)
|
|
Other, net
|
1
|
|
|
(2)
|
|
Change in restricted
funds held in trust
|
22
|
|
|
14
|
|
Change in working
capital, net of effects of acquisitions
|
(12)
|
|
|
(16)
|
|
Net cash provided by
operating activities
|
146
|
|
|
154
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Proceeds from asset
sales
|
107
|
|
|
—
|
|
Purchase of property,
plant and equipment
|
(282)
|
|
|
(267)
|
|
Acquisition of
business, net of cash acquired
|
(9)
|
|
|
(70)
|
|
Property insurance
proceeds
|
2
|
|
|
—
|
|
Other, net
|
4
|
|
|
—
|
|
Net cash used in
investing activities
|
(178)
|
|
|
(337)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Proceeds from
borrowings on long-term debt
|
—
|
|
|
294
|
|
Proceeds from
borrowings on revolving credit facility
|
658
|
|
|
655
|
|
Proceeds from
equipment financing capital leases
|
—
|
|
|
15
|
|
Proceeds from
borrowings on project debt
|
—
|
|
|
59
|
|
Proceeds from Dublin
financing
|
139
|
|
|
85
|
|
Payments on long-term
debt
|
(2)
|
|
|
(196)
|
|
Payments of
borrowings on revolving credit facility
|
(623)
|
|
|
(509)
|
|
Payments of equipment
financing capital leases
|
(3)
|
|
|
(3)
|
|
Payments on project
debt
|
(17)
|
|
|
(63)
|
|
Payments of deferred
financing costs
|
(5)
|
|
|
(8)
|
|
Cash dividends paid
to stockholders
|
(98)
|
|
|
(100)
|
|
Change in restricted
funds held in trust
|
19
|
|
|
(62)
|
|
Common stock
repurchased
|
(20)
|
|
|
—
|
|
Net cash provided by
financing activities
|
48
|
|
|
167
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1
|
|
|
(4)
|
|
Net increase
(decrease) in cash and cash equivalents
|
17
|
|
|
(20)
|
|
Cash and cash
equivalents at beginning of period
|
96
|
|
|
91
|
|
Cash and cash
equivalents at end of period
|
113
|
|
|
71
|
|
Less: Cash and cash
equivalents of assets held for sale at end of period
|
—
|
|
|
2
|
|
Cash and cash
equivalents of continuing operations at end of period
|
$
|
113
|
|
|
$
|
69
|
|
|
|
|
|
(a) For additional
information, see Exhibit 4 of this Press Release.
|
|
|
|
|
Covanta Holding
Corporation
|
|
|
Exhibit 4
|
Consolidated
Reconciliation of Net Income (Loss) and Net Cash Provided by
Operating Activities to Adjusted EBITDA
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited, in millions)
|
Net Income (Loss)
Attributable to Covanta Holding Corporation
|
$
|
54
|
|
|
$
|
34
|
|
|
$
|
(12)
|
|
|
$
|
(9)
|
|
Depreciation and
amortization expense
|
52
|
|
|
50
|
|
|
155
|
|
|
148
|
|
Interest expense,
net
|
35
|
|
|
34
|
|
|
103
|
|
|
102
|
|
Income tax expense
(benefit)
|
12
|
|
|
11
|
|
|
5
|
|
|
(19)
|
|
Impairment charges
(a)
|
—
|
|
|
—
|
|
|
19
|
|
|
24
|
|
Gain on asset sales
(b)
|
(43)
|
|
|
—
|
|
|
(43)
|
|
|
—
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Other
adjustments:
|
|
|
|
|
|
|
|
Debt service billings
in excess of revenue recognized
|
1
|
|
|
—
|
|
|
3
|
|
|
1
|
|
Severance and
reorganization costs
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
Non-cash compensation
expense (c)
|
4
|
|
|
4
|
|
|
13
|
|
|
15
|
|
Capital type
expenditures at service fee operated facilities
(d)
|
6
|
|
|
3
|
|
|
29
|
|
|
25
|
|
Other
(e)
|
2
|
|
|
2
|
|
|
7
|
|
|
9
|
|
Total
adjustments
|
70
|
|
|
105
|
|
|
294
|
|
|
310
|
|
Adjusted
EBITDA
|
$
|
124
|
|
|
$
|
139
|
|
|
$
|
282
|
|
|
$
|
301
|
|
Cash paid for
interest, net of capitalized interest
|
(24)
|
|
|
(22)
|
|
|
(91)
|
|
|
(83)
|
|
Cash paid for
taxes
|
(3)
|
|
|
(2)
|
|
|
(7)
|
|
|
(6)
|
|
Capital type
expenditures at service fee operated facilities
(d)
|
(6)
|
|
|
(3)
|
|
|
(29)
|
|
|
(25)
|
|
Adjustment for
working capital and other
|
(3)
|
|
|
11
|
|
|
(9)
|
|
|
(33)
|
|
Net cash provided
by operating activities
|
$
|
88
|
|
|
$
|
123
|
|
|
$
|
146
|
|
|
$
|
154
|
|
|
|
|
|
|
|
|
|
(a)
During the nine months ended September 30, 2016, we recorded
non-cash impairment charges totaling $19 million, of which
$13 million
related to the planned closure of our Pittsfield EfW facility in
March 2017 and $3 million related to an investment in
a joint
venture to recover and recycle metals.
During
the nine months ended September 30, 2015, we recorded non-cash
impairment charges totaling $24 million related to our
biomass
assets.
|
(b) During the three months
ended September 30, 2016, we recorded a $41 million gain on the
sale of our interests in China.
|
(c)
The nine months ended September 30, 2015 includes $4 million of
costs incurred in connection with separation agreements
related to the
departure of two executive officers.
|
(d) 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.
|
(e)
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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
Full
Year
Estimated 2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Unaudited, in millions)
|
|
|
Cash flow provided by
operating activities
|
$
|
88
|
|
|
$
|
123
|
|
|
$
|
146
|
|
|
$
|
154
|
|
|
$245 -
$295
|
Less: Maintenance
capital expenditures (a)
|
(14)
|
|
|
(16)
|
|
|
(82)
|
|
|
(71)
|
|
|
(105) -
(115)
|
Free Cash
Flow
|
$
|
74
|
|
|
$
|
107
|
|
|
$
|
64
|
|
|
$
|
83
|
|
|
$140 -
$180
|
|
|
|
|
|
|
|
|
|
|
Uses of Free Cash
Flow
|
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
Growth investments
(b)
|
$
|
(84)
|
|
|
$
|
(78)
|
|
|
$
|
(209)
|
|
|
$
|
(266)
|
|
|
|
Other investing
activities, net
|
6
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
|
Total
investments
|
$
|
(78)
|
|
|
$
|
(78)
|
|
|
$
|
(201)
|
|
|
$
|
(266)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return of capital to
stockholders:
|
|
|
|
|
|
|
|
|
|
Cash dividends paid
to stockholders
|
$
|
(33)
|
|
|
$
|
(34)
|
|
|
$
|
(98)
|
|
|
$
|
(100)
|
|
|
|
Common stock
repurchased
|
—
|
|
|
—
|
|
|
(20)
|
|
|
—
|
|
|
|
Total return of
capital to stockholders
|
$
|
(33)
|
|
|
$
|
(34)
|
|
|
$
|
(118)
|
|
|
$
|
(100)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital raising
activities:
|
|
|
|
|
|
|
|
|
|
Net proceeds from
issuance of corporate debt (c)
|
$
|
—
|
|
|
$
|
96
|
|
|
$
|
—
|
|
|
$
|
98
|
|
|
|
Net proceeds from
issuance of project debt (d)
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
|
Proceeds from Dublin
financing
|
62
|
|
|
40
|
|
|
139
|
|
|
85
|
|
|
|
Proceeds from
equipment financing capital leases (e)
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
|
Change in restricted
funds held in trust
|
4
|
|
|
(53)
|
|
|
17
|
|
|
(64)
|
|
|
|
Other financing
activities, net
|
(3)
|
|
|
(5)
|
|
|
—
|
|
|
—
|
|
|
|
Deferred financing
costs
|
(2)
|
|
|
(2)
|
|
|
(5)
|
|
|
(5)
|
|
|
|
Proceeds
from sale of China assets
|
105
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
|
Net proceeds from
capital raising activities
|
$
|
166
|
|
|
$
|
76
|
|
|
$
|
256
|
|
|
$
|
144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
repayments:
|
|
|
|
|
|
|
|
|
|
Net cash used for
scheduled principal payments on corporate debt
|
$
|
(1)
|
|
|
$
|
—
|
|
|
$
|
(2)
|
|
|
$
|
(1)
|
|
|
|
Net cash used for
scheduled principal payments on project
debt (f)
|
(11)
|
|
|
(9)
|
|
|
(15)
|
|
|
(19)
|
|
|
|
Payments of equipment
financing capital leases (e)
|
(1)
|
|
|
(1)
|
|
|
(3)
|
|
|
(3)
|
|
|
|
Total debt
repayments
|
$
|
(13)
|
|
|
$
|
(10)
|
|
|
$
|
(20)
|
|
|
$
|
(23)
|
|
|
|
Borrowing
activities - Revolving credit facility, net
|
$
|
(110)
|
|
|
$
|
(60)
|
|
|
$
|
35
|
|
|
$
|
146
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
$
|
(1)
|
|
|
$
|
(1)
|
|
|
$
|
1
|
|
|
$
|
(4)
|
|
|
|
Net change in cash
and cash equivalents
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
(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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
Maintenance capital
expenditures
|
$
|
(14)
|
|
|
$
|
(16)
|
|
|
$
|
(82)
|
|
|
$
|
(71)
|
|
|
|
Capital expenditures
associated with organic growth initiatives
|
(16)
|
|
|
(9)
|
|
|
(38)
|
|
|
(27)
|
|
|
|
Capital expenditures
associated with the New York City contract
|
—
|
|
|
(9)
|
|
|
(3)
|
|
|
(28)
|
|
|
|
Capital expenditures
associated with Essex County EfW emissions control
system
|
(9)
|
|
|
(5)
|
|
|
(27)
|
|
|
(18)
|
|
|
|
Capital expenditures
associated with construction of Dublin EfW facility
|
(59)
|
|
|
(33)
|
|
|
(132)
|
|
|
(123)
|
|
|
|
Total capital
expenditures associated with growth investments
|
(84)
|
|
|
(56)
|
|
|
(200)
|
|
|
(196)
|
|
|
|
Total purchases of
property, plant and equipment
|
$
|
(98)
|
|
|
$
|
(72)
|
|
|
$
|
(282)
|
|
|
$
|
(267)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
$
|
(84)
|
|
|
$
|
(56)
|
|
|
$
|
(200)
|
|
|
$
|
(196)
|
|
|
|
Acquisition of
business, net of cash acquired
|
—
|
|
|
(22)
|
|
|
(9)
|
|
|
(70)
|
|
|
|
Total growth
investments
|
$
|
(84)
|
|
|
$
|
(78)
|
|
|
$
|
(209)
|
|
|
$
|
(266)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Excludes borrowings under Revolving
Credit Facility. Calculated as follows:
|
|
|
Proceeds from
borrowings on long-term debt
|
$
|
—
|
|
|
$
|
129
|
|
|
$
|
—
|
|
|
$
|
294
|
|
|
|
Refinanced long-term
debt
|
—
|
|
|
(33)
|
|
|
—
|
|
|
(195)
|
|
|
|
Less: Financing costs
related to issuance of long-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
|
Net proceeds from
issuance of corporate debt
|
$
|
—
|
|
|
$
|
96
|
|
|
$
|
—
|
|
|
$
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Calculated as
follows:
|
|
|
Proceeds from
borrowings on project debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59
|
|
|
|
Refinanced project
debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(42)
|
|
|
|
Less: Financing costs
related to the issuance of project debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
|
Net proceeds from
issuance of project debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) During
the nine months ended September 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
|
$
|
(8)
|
|
|
$
|
(6)
|
|
|
$
|
(17)
|
|
|
$
|
(21)
|
|
|
|
Decrease in related
restricted funds held in trust
|
(3)
|
|
|
(3)
|
|
|
2
|
|
|
2
|
|
|
|
Net cash used for
principal payments on project debt
|
$
|
(11)
|
|
|
$
|
(9)
|
|
|
$
|
(15)
|
|
|
$
|
(19)
|
|
|
|
Covanta Holding
Corporation
|
|
Exhibit
6
|
Reconciliation of
Diluted Earnings (Loss) Per Share to Adjusted EPS
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited)
|
Diluted Earnings
(Loss) Per Share
|
$
|
0.42
|
|
|
$
|
0.25
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.07)
|
|
Reconciling Items
(a)
|
(0.24)
|
|
|
(0.03)
|
|
|
(0.14)
|
|
|
0.11
|
|
Adjusted
EPS
|
$
|
0.18
|
|
|
$
|
0.22
|
|
|
$
|
(0.23)
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
(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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited)
(In millions, except per share amounts)
|
Reconciling
Items
|
|
|
|
|
|
|
|
Impairment charges
(a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
24
|
|
Gain on asset sales
(a)
|
(43)
|
|
|
—
|
|
|
(43)
|
|
|
—
|
|
Severance and
reorganization costs (b)
|
—
|
|
|
1
|
|
|
2
|
|
|
7
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Effect on income of
derivative instruments not designated
as hedging instruments
|
1
|
|
|
(3)
|
|
|
2
|
|
|
(3)
|
|
Effect of foreign
exchange loss (gain) on indebtedness
|
—
|
|
|
1
|
|
|
(1)
|
|
|
2
|
|
Total Reconciling
Items, pre-tax
|
(42)
|
|
|
(1)
|
|
|
(21)
|
|
|
32
|
|
Pro forma income tax
impact (c)
|
10
|
|
|
(4)
|
|
|
2
|
|
|
(18)
|
|
Grantor trust
activity
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Total Reconciling
Items, net of tax
|
$
|
(31)
|
|
|
$
|
(4)
|
|
|
$
|
(18)
|
|
|
$
|
15
|
|
Diluted Earnings
Per Share Impact
|
$
|
(0.24)
|
|
|
$
|
(0.03)
|
|
|
$
|
(0.14)
|
|
|
$
|
0.11
|
|
Weighted Average
Diluted Shares Outstanding
|
131
|
|
|
134
|
|
|
129
|
|
|
132
|
|
|
|
|
|
|
|
|
|
(a) For additional
information, see Exhibit 4 of this Press Release.
|
(b) The nine months
ended September 30, 2015, includes $6 million 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
September 30, 2016
|
|
North
America
|
|
|
|
|
|
EfW
|
|
Other
|
|
Total
|
|
Other
|
|
Consolidated
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Waste and
service:
|
|
|
|
|
|
|
|
|
|
Waste processing
& handling
|
$
|
241
|
|
|
$
|
30
|
|
|
$
|
271
|
|
|
$
|
—
|
|
|
$
|
271
|
|
Debt
service
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Other
revenue
|
3
|
|
|
23
|
|
|
26
|
|
|
—
|
|
|
26
|
|
Total waste and
service
|
246
|
|
|
53
|
|
|
299
|
|
|
—
|
|
|
299
|
|
Energy:
|
|
|
|
|
|
|
|
|
|
Energy
sales
|
81
|
|
|
—
|
|
|
81
|
|
|
—
|
|
|
81
|
|
Capacity
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
Total energy
revenue
|
92
|
|
|
—
|
|
|
92
|
|
|
—
|
|
|
92
|
|
Recycled
metals:
|
|
|
|
|
|
|
|
|
|
Ferrous
|
6
|
|
|
2
|
|
|
8
|
|
|
—
|
|
|
8
|
|
Non-ferrous
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Total recycled
metals
|
12
|
|
|
2
|
|
|
14
|
|
|
—
|
|
|
14
|
|
Other
revenue
|
—
|
|
|
16
|
|
|
16
|
|
|
—
|
|
|
16
|
|
Total
revenue
|
$
|
350
|
|
|
$
|
71
|
|
|
$
|
421
|
|
|
$
|
—
|
|
|
$
|
421
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
|
Plant operating
expense:
|
|
|
|
|
|
|
|
|
|
Plant
maintenance
|
$
|
46
|
|
|
$
|
2
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
48
|
|
Other plant operating
expense
|
159
|
|
|
63
|
|
|
222
|
|
|
2
|
|
|
224
|
|
Total plant operating
expense
|
205
|
|
|
65
|
|
|
270
|
|
|
2
|
|
|
272
|
|
Other operating
expense
|
(1)
|
|
|
15
|
|
|
14
|
|
|
—
|
|
|
14
|
|
General and
administrative
|
—
|
|
|
23
|
|
|
23
|
|
|
—
|
|
|
23
|
|
Depreciation and
amortization
|
44
|
|
|
8
|
|
|
52
|
|
|
—
|
|
|
52
|
|
Total operating
expense
|
$
|
248
|
|
|
$
|
111
|
|
|
$
|
359
|
|
|
$
|
2
|
|
|
$
|
361
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
$
|
102
|
|
|
$
|
(40)
|
|
|
$
|
62
|
|
|
$
|
(2)
|
|
|
$
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
September 30, 2015
|
|
North
America
|
|
|
|
|
|
EfW
|
|
Other
|
|
Total
|
|
Other
|
|
Consolidated
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Waste and
service:
|
|
|
|
|
|
|
|
|
|
Waste processing
& handling
|
$
|
230
|
|
|
$
|
30
|
|
|
$
|
260
|
|
|
$
|
1
|
|
|
$
|
261
|
|
Debt
service
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Other
revenue
|
2
|
|
|
16
|
|
|
18
|
|
|
—
|
|
|
18
|
|
Total waste and
service
|
236
|
|
|
46
|
|
|
282
|
|
|
1
|
|
|
283
|
|
Energy:
|
|
|
|
|
|
|
|
|
|
Energy
sales
|
76
|
|
|
7
|
|
|
83
|
|
|
10
|
|
|
93
|
|
Capacity
|
10
|
|
|
5
|
|
|
15
|
|
|
—
|
|
|
15
|
|
Total energy
revenue
|
86
|
|
|
12
|
|
|
98
|
|
|
10
|
|
|
108
|
|
Recycled
metals:
|
|
|
|
|
|
|
|
|
|
Ferrous
|
8
|
|
|
2
|
|
|
10
|
|
|
—
|
|
|
10
|
|
Non-ferrous
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Total recycled
metals
|
14
|
|
|
2
|
|
|
16
|
|
|
—
|
|
|
16
|
|
Other
revenue
|
—
|
|
|
15
|
|
|
15
|
|
|
—
|
|
|
15
|
|
Total
revenue
|
$
|
336
|
|
|
$
|
75
|
|
|
$
|
411
|
|
|
$
|
11
|
|
|
$
|
422
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
|
Plant operating
expense:
|
|
|
|
|
|
|
|
|
|
Plant
maintenance
|
$
|
43
|
|
|
$
|
3
|
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
46
|
|
Other plant operating
expense
|
151
|
|
|
54
|
|
|
205
|
|
|
9
|
|
|
214
|
|
Total plant operating
expense
|
194
|
|
|
57
|
|
|
251
|
|
|
9
|
|
|
260
|
|
Other operating
expense
|
1
|
|
|
17
|
|
|
18
|
|
|
—
|
|
|
18
|
|
General and
administrative
|
—
|
|
|
19
|
|
|
19
|
|
|
1
|
|
|
20
|
|
Depreciation and
amortization
|
43
|
|
|
9
|
|
|
52
|
|
|
(2)
|
|
|
50
|
|
Total operating
expense
|
$
|
238
|
|
|
$
|
102
|
|
|
$
|
340
|
|
|
$
|
8
|
|
|
$
|
348
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
$
|
98
|
|
|
$
|
(27)
|
|
|
$
|
71
|
|
|
$
|
3
|
|
|
$
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 - Q3 2015 to Q3 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited, $ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store
(a)
|
|
Contract
Transitions(b)
|
|
|
|
|
|
|
|
|
Q3
2015
|
|
Price
|
|
%
|
|
Volume
|
|
%
|
|
Total
|
|
%
|
|
Waste
|
|
PPA
|
|
Transactions(c)
|
|
Total
Changes
|
|
Q3
2016
|
Waste and
service:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste
processing
|
$
|
230
|
|
|
$
|
6
|
|
|
2.5
|
%
|
|
$
|
2
|
|
|
0.9
|
%
|
|
$
|
8
|
|
|
3.4
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
241
|
|
Debt
service
|
4
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
2
|
|
Other
revenue
|
2
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
3
|
|
Total waste and
service
|
236
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
3.4
|
%
|
|
(1)
|
|
|
—
|
|
|
3
|
|
|
10
|
|
|
246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
sales
|
76
|
|
|
4
|
|
|
5.4
|
%
|
|
(4)
|
|
|
-5.4
|
%
|
|
—
|
|
|
—
|
%
|
|
6
|
|
|
(1)
|
|
|
—
|
|
|
5
|
|
|
81
|
|
Capacity
|
10
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
7.0
|
%
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
1
|
|
|
11
|
|
Total energy
revenue
|
86
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
0.6
|
%
|
|
6
|
|
|
(2)
|
|
|
—
|
|
|
6
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recycled
metals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
8
|
|
|
(3)
|
|
|
-30.4
|
%
|
|
—
|
|
|
3.3
|
%
|
|
(2)
|
|
|
-27.1
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
6
|
|
Non-ferrous
|
6
|
|
|
(1)
|
|
|
-17.2
|
%
|
|
1
|
|
|
10.8
|
%
|
|
—
|
|
|
-6.3
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Total recycled
metals
|
14
|
|
|
(4)
|
|
|
-24.9
|
%
|
|
1
|
|
|
6.4
|
%
|
|
(3)
|
|
|
-18.4
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
12
|
|
Total
revenue
|
$
|
336
|
|
|
|
|
|
|
|
|
|
|
$
|
6
|
|
|
1.8
|
%
|
|
$
|
6
|
|
|
$
|
(2)
|
|
|
$
|
3
|
|
|
$
|
14
|
|
|
$350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant operating
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant
maintenance
|
$
|
43
|
|
|
|
|
|
|
|
|
|
|
$
|
4
|
|
|
8.5
|
%
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
46
|
|
Other plant operating
expense
|
151
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
2.7
|
%
|
|
—
|
|
|
—
|
|
3
|
|
|
8
|
|
|
159
|
|
Total plant
operating expense
|
194
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
4.0
|
%
|
|
—
|
|
|
—
|
|
3
|
|
|
11
|
|
|
205
|
|
Other operating
expense
|
1
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
|
|
—
|
|
|
—
|
|
—
|
|
|
(2)
|
|
|
(1)
|
|
Depreciation and
amortization
|
43
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
1
|
|
|
—
|
|
—
|
|
|
1
|
|
|
44
|
|
Total operating
expense
|
$
|
238
|
|
|
|
|
|
|
|
|
|
|
$
|
5
|
|
|
|
|
$
|
1
|
|
|
—
|
|
$
|
3
|
|
|
$
|
10
|
|
|
$
|
248
|
|
Operating Income
(Loss)
|
$
|
98
|
|
|
|
|
|
|
|
|
|
|
$
|
1
|
|
|
|
|
$
|
5
|
|
|
$
|
(2)
|
|
|
$
|
(1)
|
|
|
$
|
4
|
|
|
$
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
September 30,
|
|
2016
|
|
2015
|
EfW
Waste
|
|
|
|
Tons: (in
millions)
|
|
|
|
Contracted
|
4.6
|
|
|
4.4
|
|
Uncontracted
|
0.5
|
|
|
0.5
|
|
Total Tons
|
5.1
|
|
|
4.9
|
|
|
|
|
|
Revenue per
Ton:
|
|
|
|
Contracted
|
$
|
44.21
|
|
|
$
|
44.57
|
|
Uncontracted
|
$
|
76.76
|
|
|
$
|
69.21
|
|
Average Revenue per
Ton
|
$
|
47.45
|
|
|
$
|
47.01
|
|
|
|
|
|
EfW
Energy
|
|
|
|
Energy Sales: (MWh
in millions)
|
|
|
|
Contracted
|
0.8
|
|
|
0.8
|
|
Hedged
|
0.5
|
|
|
0.3
|
|
Market
|
0.2
|
|
|
0.4
|
|
Total Energy
Sales
|
1.5
|
|
|
1.5
|
|
|
|
|
|
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
|
$
|
65.82
|
|
|
$
|
63.69
|
|
Hedged
|
$
|
37.98
|
|
|
$
|
44.05
|
|
Market
|
$
|
37.32
|
|
|
$
|
30.86
|
|
Average Revenue per
MWh
|
$
|
52.63
|
|
|
$
|
50.78
|
|
|
|
|
|
Metals
|
|
|
|
Tons Sold: (in
thousands)
|
|
|
|
Ferrous
|
72
|
|
|
90
|
|
Non-Ferrous
|
10
|
|
|
9
|
|
|
|
|
|
Revenue per
Ton:
|
|
|
|
Ferrous
|
$
|
117
|
|
|
$
|
113
|
|
Non-Ferrous
|
$
|
581
|
|
|
$
|
716
|
|
|
|
|
|
EfW Plant
Operating Expense ($ in millions)
|
|
|
|
Plant Operating
Expense - Gross
|
$
|
217
|
|
|
$
|
211
|
|
Less: Client
pass-through costs
|
(9)
|
|
|
(14)
|
|
Less: REC sales -
contra expense
|
(2)
|
|
|
(3)
|
|
Plant Operating
Expense - Reported
|
$
|
205
|
|
|
$
|
194
|
|
Client pass-throughs
as % of gross costs
|
4.3
|
%
|
|
6.5
|
%
|
|
|
|
|
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
September 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
September 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 September 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 September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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