MORRISTOWN, N.J., Feb. 14,
2019 /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 year
ended December 31, 2018.
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
|
|
|
|
(Unaudited, $ in
millions,
except per share
amounts)
|
Revenue
|
$1,868
|
|
$1,752
|
Net income
|
$152
|
|
$57
|
Adjusted
EBITDA
|
$457
|
|
$408
|
Net cash provided by
operating activities
|
$238
|
|
$242
|
Free Cash
Flow
|
$100
|
|
$132
|
Diluted
EPS
|
$1.15
|
|
$0.44
|
Adjusted
EPS
|
$(0.10)
|
|
$(0.37)
|
|
Reconciliations of
non-GAAP measures can be found in the exhibits to this press
release.
|
Key Highlights
- 2018 results at the high end of guidance range
- Record operating performance on waste processing, energy
generation, and metal recovery
- Reached financial close on first UK project in partnership with
Green Investment Group
- Began construction of first Total Ash Processing System
("TAPS")
- Meaningful progress on fleet optimization
"We finished 2018 on a strong note, delivering double-digit
Adjusted EBITDA growth with record operating and safety
performance," said Stephen J. Jones, Covanta's President and CEO.
"Further, we have taken significant steps towards our strategic
growth objectives, with our first UK project and first TAPS project
recently moving into construction. Looking ahead to 2019, we expect
to generate significantly improved Free Cash Flow, continue to
optimize our unmatched domestic fleet, and move several new
projects into construction in the UK."
More detail on our fourth quarter results can be found in the
exhibits to this release and in our fourth quarter 2018 earnings
presentation found in the Investor Relations section of the Covanta
website at www.covanta.com.
2019 Guidance
The Company established guidance for
2019 for the following key metrics:
(In millions)
Metric
|
2018
Actual
|
2019
Guidance Range (1)
|
Adjusted
EBITDA
|
$457
|
$440 -
$465
|
Free Cash
Flow
|
$100
|
$120 -
$145
|
|
(1)
For additional information on the reconciliation of Free Cash Flow
to Net cash provided by operating activities, see Exhibit 5 of this
press release. Guidance as of February 14, 2019.
|
Conference Call Information
Covanta will host a
conference call at 8:30 AM (Eastern)
on Friday, February 15, 2019 to discuss its fourth quarter
results.
The conference call will begin with prepared remarks, which will
be followed by a question and answer session. To participate,
please dial 1-833-238-7947 approximately 10 minutes prior to
the scheduled start of the call. If calling outside of
the United States, please dial
1-647-689-4195. Please request the "Covanta Holding
Corporation Earnings Conference 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 in the Investor Relations section of the
Covanta website at www.covanta.com.
An archived webcast will be available two hours after the end of
the conference call and can be accessed through the Investor
Relations section of the Covanta website at 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 22
million tons of waste from municipalities and businesses into
clean, renewable electricity to power one million homes and recycle
over 600,000 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, as amended (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. For additional information see
the Cautionary Note Regarding Forward-Looking Statements at the end
of the Exhibits.
Covanta Holding
Corporation
|
Exhibit 1
|
Consolidated
Statements of Operations
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
(In millions, except per share amounts)
|
OPERATING
REVENUE:
|
|
|
|
|
|
|
|
|
Waste and service
revenue
|
|
$
|
350
|
|
|
$
|
329
|
|
|
$
|
1,327
|
|
|
$
|
1,231
|
|
Energy
revenue
|
|
86
|
|
|
93
|
|
|
343
|
|
|
334
|
|
Recycled metals
revenue
|
|
23
|
|
|
28
|
|
|
95
|
|
|
82
|
|
Other operating
revenue
|
|
41
|
|
|
45
|
|
|
103
|
|
|
105
|
|
Total operating
revenue
|
|
500
|
|
|
495
|
|
|
1,868
|
|
|
1,752
|
|
OPERATING
EXPENSE:
|
|
|
|
|
|
|
|
|
Plant operating
expense
|
|
334
|
|
|
319
|
|
|
1,321
|
|
|
1,271
|
|
Other operating
expense, net
|
|
21
|
|
|
27
|
|
|
65
|
|
|
51
|
|
General and
administrative expense
|
|
30
|
|
|
30
|
|
|
115
|
|
|
112
|
|
Depreciation and
amortization expense
|
|
56
|
|
|
60
|
|
|
218
|
|
|
215
|
|
Impairment charges
(a)
|
|
—
|
|
|
1
|
|
|
86
|
|
|
2
|
|
Total operating
expense
|
|
441
|
|
|
437
|
|
|
1,805
|
|
|
1,651
|
|
Operating
income
|
|
59
|
|
|
58
|
|
|
63
|
|
|
101
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(34)
|
|
|
(41)
|
|
|
(145)
|
|
|
(147)
|
|
Gain (loss) on sale
of business (a)
|
|
—
|
|
|
—
|
|
|
217
|
|
|
(6)
|
|
Loss on
extinguishment of debt (a)
|
|
(12)
|
|
|
(71)
|
|
|
(15)
|
|
|
(84)
|
|
Other (expense)
income, net
|
|
(2)
|
|
|
(1)
|
|
|
(3)
|
|
|
1
|
|
Total (expense)
income
|
|
(48)
|
|
|
(113)
|
|
|
54
|
|
|
(236)
|
|
Income (loss)
before income tax (expense) benefit and equity in net
income from unconsolidated
investments
|
|
11
|
|
|
(55)
|
|
|
117
|
|
|
(135)
|
|
Income tax (expense)
benefit (b)
|
|
(5)
|
|
|
186
|
|
|
29
|
|
|
191
|
|
Equity in net income
from unconsolidated investments
|
|
3
|
|
|
—
|
|
|
6
|
|
|
1
|
|
Net
income
|
|
$
|
9
|
|
|
$
|
131
|
|
|
$
|
152
|
|
|
$
|
57
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
130
|
|
|
130
|
|
|
130
|
|
|
130
|
|
Diluted
|
|
133
|
|
|
131
|
|
|
132
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.07
|
|
|
$
|
1.02
|
|
|
$
|
1.17
|
|
|
$
|
0.44
|
|
Diluted
|
|
$
|
0.07
|
|
|
$
|
1.01
|
|
|
$
|
1.15
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
Cash Dividend
Declared Per Share
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
|
(a)
|
For additional
information, see Exhibit 4 of this Press Release.
|
|
|
(b)
|
The three and twelve
months ended December 31, 2017 include a provisional net tax
benefit of $183 million ($1.39 and $1.40 per diluted share,
respectively) associated with the enactment of the Tax Cuts and
Jobs Act of 2017. The enactment of this legislation resulted in an
income tax benefit and net income increase of $204 million,
primarily due to a one-time revaluation of our net deferred tax
liability based on a U.S. federal tax rate of 21%, partially offset
by the estimated impact of a one-time transition tax on our
unremitted foreign earnings totaling $21 million, which we elected
to offset with historical net operating losses.
|
|
|
During the twelve
months ended December 31, 2018, we completed our analysis and
accounting related to this legislation and we recorded an
additional $1 million of tax expense related to the
one-time transition tax. There was no change to the tax benefit of
the one-time revaluation of the net deferred tax liability recorded
in 2017.
|
Covanta Holding
Corporation
|
Exhibit 2
|
Consolidated
Balance Sheets
|
|
|
|
|
As
of
|
|
December
31,
|
|
2018
|
|
2017
|
ASSETS
|
(In millions, except per share amounts)
|
Current:
|
|
|
|
Cash and cash
equivalents
|
$
|
58
|
|
|
$
|
46
|
|
Restricted funds held
in trust
|
39
|
|
|
43
|
|
Receivables (less
allowances of $8 and $14, respectively)
|
338
|
|
|
341
|
|
Prepaid expenses and
other current assets
|
62
|
|
|
73
|
|
Assets held for sale
(a)
|
2
|
|
|
653
|
|
Total Current
Assets
|
499
|
|
|
1,156
|
|
Property, plant and
equipment, net
|
2,514
|
|
|
2,606
|
|
Restricted funds held
in trust
|
8
|
|
|
28
|
|
Intangible assets,
net
|
279
|
|
|
287
|
|
Goodwill
|
321
|
|
|
313
|
|
Other
assets
|
222
|
|
|
51
|
|
Total
Assets
|
$
|
3,843
|
|
|
$
|
4,441
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current:
|
|
|
|
Current portion of
long-term debt
|
$
|
15
|
|
|
$
|
10
|
|
Current portion of
project debt
|
19
|
|
|
23
|
|
Accounts
payable
|
76
|
|
|
151
|
|
Accrued expenses and
other current liabilities
|
333
|
|
|
313
|
|
Liabilities held for
sale (a)
|
—
|
|
|
540
|
|
Total Current
Liabilities
|
443
|
|
|
1,037
|
|
Long-term
debt
|
2,327
|
|
|
2,339
|
|
Project
debt
|
133
|
|
|
151
|
|
Deferred income
taxes
|
378
|
|
|
412
|
|
Other
liabilities
|
75
|
|
|
75
|
|
Total
Liabilities
|
3,356
|
|
|
4,014
|
|
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
131 shares)
|
14
|
|
|
14
|
|
Additional paid-in
capital
|
841
|
|
|
822
|
|
Accumulated other
comprehensive loss
|
(33)
|
|
|
(55)
|
|
Accumulated
deficit
|
(334)
|
|
|
(353)
|
|
Treasury stock, at
par
|
(1)
|
|
|
(1)
|
|
Total
Equity
|
487
|
|
|
427
|
|
Total Liabilities
and Equity
|
$
|
3,843
|
|
|
$
|
4,441
|
|
|
|
|
|
(a) During the
fourth quarter of 2017, our EfW facility in Dublin, Ireland met the
criteria to be classified as held for sale.
|
Covanta Holding
Corporation
|
Exhibit 3
|
Consolidated
Statements of Cash Flow
|
|
|
|
|
Twelve Months
Ended
December 31,
|
|
2018
|
|
2017
(a)
|
|
|
|
|
|
(Unaudited, in
millions)
|
OPERATING
ACTIVITIES:
|
|
|
|
Net income
|
$
|
152
|
|
|
$
|
57
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expense
|
218
|
|
|
215
|
|
Amortization of
deferred debt financing costs
|
5
|
|
|
7
|
|
(Gain) loss
on sale of business (b)
|
(217)
|
|
|
6
|
|
Impairment charges
(b)
|
86
|
|
|
2
|
|
Loss on
extinguishment of debt (b)
|
15
|
|
|
84
|
|
Stock-based
compensation expense
|
24
|
|
|
18
|
|
Provision for
doubtful accounts
|
2
|
|
|
9
|
|
Equity in net income
from unconsolidated investments
|
(6)
|
|
|
(1)
|
|
Deferred income
taxes
|
(31)
|
|
|
(193)
|
|
Dividends from
unconsolidated investments
|
13
|
|
|
2
|
|
Other, net
|
(10)
|
|
|
(13)
|
|
Change in working
capital, net of effects of acquisitions and dispositions
|
(12)
|
|
|
44
|
|
Changes in noncurrent
assets and liabilities, net
|
(1)
|
|
|
5
|
|
Net cash provided by
operating activities
|
238
|
|
|
242
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Purchase of property,
plant and equipment
|
(206)
|
|
|
(277)
|
|
Acquisition of
businesses, net of cash acquired
|
(50)
|
|
|
(16)
|
|
Proceeds from the
sale of assets, net of restricted cash
|
128
|
|
|
4
|
|
Property insurance
proceeds
|
18
|
|
|
8
|
|
Payment of
indemnification claim from sale of asset
|
(7)
|
|
|
—
|
|
Investment in equity
affiliate
|
(16)
|
|
|
—
|
|
Other, net
|
(6)
|
|
|
(8)
|
|
Net cash used in
investing activities
|
(139)
|
|
|
(289)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Proceeds from
borrowings on long-term debt
|
1,165
|
|
|
400
|
|
Proceeds from
borrowings on revolving credit facility
|
740
|
|
|
952
|
|
Proceeds from
insurance premium financing
|
25
|
|
|
24
|
|
Proceeds from
borrowing on Dublin project financing
|
—
|
|
|
643
|
|
Payment related to
Dublin interest rate swap
|
—
|
|
|
(17)
|
|
Payments on the
Dublin Convertible Preferred
|
—
|
|
|
(132)
|
|
Payments on long-term
debt
|
(939)
|
|
|
(415)
|
|
Payments on revolving
credit facility
|
(973)
|
|
|
(850)
|
|
Payments on equipment
financing capital leases
|
(5)
|
|
|
(5)
|
|
Payments on project
debt
|
(23)
|
|
|
(382)
|
|
Payment of deferred
financing costs
|
(16)
|
|
|
(21)
|
|
Payment of Dublin
financing costs
|
—
|
|
|
(19)
|
|
Cash dividends paid
to stockholders
|
(134)
|
|
|
(131)
|
|
Payment of insurance
premium financing
|
(24)
|
|
|
(4)
|
|
Other, net
|
(5)
|
|
|
(3)
|
|
Net cash (used in)
provided by financing activities
|
(189)
|
|
|
40
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1
|
|
|
7
|
|
Net (decrease)
increase in cash, cash equivalents and restricted cash
|
(89)
|
|
|
—
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
194
|
|
|
194
|
|
Cash, cash
equivalents and restricted cash at end of period
|
105
|
|
|
194
|
|
Less: Cash and cash
equivalents of assets held for sale at end of period
|
—
|
|
|
77
|
|
Cash and cash
equivalents of continuing operations at end of period
|
$
|
105
|
|
|
$
|
117
|
|
|
|
|
|
(a)
|
As adjusted to
reflect the adoption of ASU 2016-18 effective January 1, 2018. As a
result of adoption, the statement of cash flows explains the change
during the period in the total of cash, cash equivalents, and
amounts generally described as restricted cash or restricted cash
equivalents.
|
|
|
(b)
|
For additional
information, see Exhibit 4 of this Press Release.
|
Covanta Holding
Corporation
|
Exhibit 4
|
Consolidated
Reconciliation of Net Income and Net Cash Provided by Operating
Activities to
Adjusted EBITDA
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited, in millions)
|
Net
income
|
|
$
|
9
|
|
|
$
|
131
|
|
|
$
|
152
|
|
|
$
|
57
|
|
Depreciation and
amortization expense
|
|
56
|
|
|
60
|
|
|
218
|
|
|
215
|
|
Interest
expense
|
|
34
|
|
|
41
|
|
|
145
|
|
|
147
|
|
Income tax expense
(benefit)
|
|
5
|
|
|
(186)
|
|
|
(29)
|
|
|
(191)
|
|
Impairment charges
(a)
|
|
—
|
|
|
1
|
|
|
86
|
|
|
2
|
|
(Gain) loss on sale
of business (b)
|
|
—
|
|
|
—
|
|
|
(217)
|
|
|
6
|
|
Loss on
extinguishment of debt (c)
|
|
12
|
|
|
71
|
|
|
15
|
|
|
84
|
|
Property insurance
recoveries, net
|
|
(11)
|
|
|
—
|
|
|
(18)
|
|
|
(2)
|
|
Capital type
expenditures at client owned facilities (d)
|
|
9
|
|
|
19
|
|
|
37
|
|
|
55
|
|
Debt service billings
(less than) in excess of revenue recognized
|
|
(1)
|
|
|
1
|
|
|
(1)
|
|
|
5
|
|
Business development
and transaction costs
|
|
(1)
|
|
|
4
|
|
|
3
|
|
|
5
|
|
Severance and
reorganization costs
|
|
—
|
|
|
—
|
|
|
5
|
|
|
1
|
|
Stock-based
compensation expense
|
|
6
|
|
|
2
|
|
|
24
|
|
|
18
|
|
Adjustments to
reflect Adjusted EBITDA from unconsolidated investments
|
|
7
|
|
|
—
|
|
|
23
|
|
|
—
|
|
Other
(e)
|
|
7
|
|
|
3
|
|
|
14
|
|
|
6
|
|
Adjusted
EBITDA
|
|
$
|
132
|
|
|
$
|
147
|
|
|
$
|
457
|
|
|
$
|
408
|
|
Capital type
expenditures at client owned facilities (d)
|
|
(9)
|
|
|
(19)
|
|
|
(37)
|
|
|
(55)
|
|
Cash paid for
interest, net of capitalized interest
|
|
(21)
|
|
|
(32)
|
|
|
(136)
|
|
|
(132)
|
|
Cash paid for taxes,
net
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
Equity in net income
from unconsolidated investments
|
|
(3)
|
|
|
—
|
|
|
(6)
|
|
|
(1)
|
|
Adjustments to
reflect Adjusted EBITDA from unconsolidated investments
|
|
(7)
|
|
|
—
|
|
|
(23)
|
|
|
—
|
|
Dividends from
unconsolidated investments
|
|
12
|
|
|
1
|
|
|
13
|
|
|
2
|
|
Adjustment for
working capital and other
|
|
(13)
|
|
|
49
|
|
|
(28)
|
|
|
20
|
|
Net cash provided
by operating activities
|
|
$
|
91
|
|
|
$
|
146
|
|
|
$
|
238
|
|
|
$
|
242
|
|
|
|
(a)
|
During the year ended
December 31, 2018, we identified indicators
of impairment associated with certain of our EfW
facilities and recorded a non-cash impairment charge of
$86 million, to reduce the carrying value of the facilities to
their estimated fair value.
|
|
|
(b)
|
During the year ended
December 31, 2018, we recorded a $7 million gain on the sale of
our equity interests in Koma Kulshan, a $204 million gain on
the sale of 50% of our Dublin project to our joint venture with the
Green Investment Group Limited and a $6 million gain on the sale of
our remaining interests in China.
|
|
|
|
During
the year ended December 31, 2017, we recorded
a $6 million charge for indemnification claims related to
the sale of our interests in China, which was completed in
2016.
|
|
|
(c)
|
During the
year ended December 31, 2018, we recorded a $3 million
loss related to the refinancing of our tax-exempt bonds and a $12
million loss related to the redemption of our redemption of our
6.375% Senior Notes due 2022.
|
|
|
|
During the year ended
December 31, 2017, we recorded a $71 million loss related to our
Dublin debt refinancing and a $13 million loss related to the
redemption of our 7.25% Senior Notes due 2020.
|
|
|
(d)
|
Adjustment for impact
of adoption of FASB ASC 853 - Service Concession
Arrangements. These types of capital equipment related
expenditures at our service fee operated facilities were
historically capitalized prior to adoption of this new accounting
standard effective January 1, 2015 and are capitalized at
facilities that we own.
|
|
|
(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
Net Cash Provided by Operating Activities to Free Cash
Flow
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
Full Year
Estimated 2019
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited, in millions)
|
|
|
Net cash provided
by operating activities
|
$
|
91
|
|
|
$
|
146
|
|
|
$
|
238
|
|
|
$
|
242
|
|
|
$230 -
$260
|
Add: Changes in
restricted funds - operating (a)
|
(3)
|
|
|
(17)
|
|
|
4
|
|
|
1
|
|
|
10
|
Less: Maintenance
capital expenditures (b)
|
(47)
|
|
|
(27)
|
|
|
(142)
|
|
|
(111)
|
|
|
(130 -
120)
|
Free Cash
Flow
|
$
|
41
|
|
|
$
|
102
|
|
|
$
|
100
|
|
|
$
|
132
|
|
|
$120 -
$145
|
|
|
|
(a)
Adjustment for the impact of the adoption of ASU 2016-18 effective
January 1, 2018. As a result of adoption, the statement of cash
flows explains the change during the period in the total of cash,
cash equivalents, and amounts generally described as restricted
cash or restricted cash equivalents. Therefore, changes in
restricted funds are eliminated in arriving at net cash, cash
equivalents and restricted funds provided by operating
activities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
Maintenance capital
expenditures
|
$
|
(47)
|
|
|
$
|
(27)
|
|
|
$
|
(142)
|
|
|
$
|
(111)
|
|
|
|
Net maintenance
capital expenditures paid but incurred in prior periods
|
9
|
|
|
5
|
|
|
(1)
|
|
|
5
|
|
|
|
Capital expenditures
associated with construction
of Dublin EfW facility
|
—
|
|
|
(26)
|
|
|
(22)
|
|
|
(117)
|
|
|
|
Capital expenditures
associated with the New York
City MTS contract
|
(4)
|
|
|
—
|
|
|
(13)
|
|
|
—
|
|
|
|
Capital expenditures
associated with organic growth initiatives
|
(6)
|
|
|
(7)
|
|
|
(24)
|
|
|
(37)
|
|
|
|
Total capital
expenditures associated with growth investments
(c)
|
(10)
|
|
|
(33)
|
|
|
(59)
|
|
|
(154)
|
|
|
|
Capital expenditures
associated with property insurance events
|
—
|
|
|
(4)
|
|
|
(4)
|
|
|
(17)
|
|
|
|
Total purchases of
property, plant and equipment
|
$
|
(48)
|
|
|
$
|
(59)
|
|
|
$
|
(206)
|
|
|
$
|
(277)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Total
growth investments represents investments in growth opportunities,
including organic growth initiatives, technology, business
development, and other similar expenditures.
|
|
|
|
|
|
Capital expenditures
associated with growth investments
|
$
|
(10)
|
|
|
$
|
(33)
|
|
|
$
|
(59)
|
|
|
$
|
(154)
|
|
|
|
UK business
development projects
|
(1)
|
|
|
(1)
|
|
|
(5)
|
|
|
(3)
|
|
|
|
Investment in equity
affiliate
|
(16)
|
|
|
—
|
|
|
(16)
|
|
|
—
|
|
|
|
Asset and business
acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(50)
|
|
|
(17)
|
|
|
|
Total growth
investments
|
$
|
(27)
|
|
|
$
|
(34)
|
|
|
$
|
(130)
|
|
|
$
|
(174)
|
|
|
|
Covanta Holding
Corporation
|
Exhibit
6
|
Reconciliation of
Diluted Earnings Per Share to Adjusted EPS
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
Diluted Earnings
Per Share:
|
|
$
|
0.07
|
|
|
$
|
1.01
|
|
|
$
|
1.15
|
|
|
$
|
0.44
|
|
Reconciling Items
(a)
|
|
(0.03)
|
|
|
(0.92)
|
|
|
(1.25)
|
|
|
(0.81)
|
|
Adjusted
EPS
|
|
$
|
0.04
|
|
|
$
|
0.09
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.37)
|
|
|
|
|
|
|
|
|
|
|
(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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
(In millions, except per share amounts)
|
Reconciling
Items
|
|
|
|
|
|
|
|
|
Impairment charges
(a)
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
86
|
|
|
$
|
2
|
|
(Gain) loss on sale
of business ⁽ᵃ⁾
|
|
—
|
|
|
—
|
|
|
(217)
|
|
|
6
|
|
Property insurance
recoveries, net
|
|
(11)
|
|
|
—
|
|
|
(18)
|
|
|
(2)
|
|
Severance and
reorganization costs
|
|
—
|
|
|
—
|
|
|
5
|
|
|
1
|
|
Loss on
extinguishment of debt (a)
|
|
12
|
|
|
71
|
|
|
15
|
|
|
84
|
|
Effect of foreign
exchange loss on indebtedness
|
|
2
|
|
|
—
|
|
|
3
|
|
|
(2)
|
|
Other
|
|
(1)
|
|
|
1
|
|
|
(1)
|
|
|
1
|
|
Total Reconciling
Items, pre-tax
|
|
2
|
|
|
73
|
|
|
(127)
|
|
|
90
|
|
Pro forma income tax
impact (b)
|
|
(1)
|
|
|
1
|
|
|
(19)
|
|
|
(4)
|
|
Impact of New Jersey
state tax law change
|
|
(5)
|
|
|
—
|
|
|
(19)
|
|
|
—
|
|
Grantor trust
activity
|
|
—
|
|
|
(11)
|
|
|
—
|
|
|
(9)
|
|
Impact of federal tax
reform rate change (c)
|
|
—
|
|
|
(204)
|
|
|
—
|
|
|
(204)
|
|
Transition tax
(c)
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
Total Reconciling
Items, net of tax
|
|
$
|
(4)
|
|
|
$
|
(120)
|
|
|
$
|
(165)
|
|
|
$
|
(106)
|
|
Diluted Per Share
Impact
|
|
$
|
(0.03)
|
|
|
$
|
(0.92)
|
|
|
$
|
(1.25)
|
|
|
$
|
(0.81)
|
|
Weighted Average
Diluted Shares Outstanding
|
|
133
|
|
|
131
|
|
|
132
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
(a) For additional
information, see Exhibit 4 of this Press Release.
|
(b) We calculate
the federal and state tax impact of each item using the statutory
federal tax rate of 21% for 2018 and 35% for 2017 and
applicable state rates.
|
(c) For additional
information, see Exhibit 1 - Note (b) of this Press
Release.
|
Covanta Holding
Corporation
|
Exhibit
7
|
Supplemental
Information
|
|
(Unaudited, $ in
millions)
|
|
|
|
Twelve Months
Ended December 31,
|
|
|
2018
|
|
2017
|
REVENUE:
|
|
|
|
|
Waste and service
revenue:
|
|
|
|
|
EfW tip
fees
|
|
$
|
624
|
|
|
$
|
572
|
|
EfW service
fees
|
|
424
|
|
|
393
|
|
Environmental
services (a)
|
|
141
|
|
|
129
|
|
Municipal services
(b)
|
|
207
|
|
|
194
|
|
Other
(c)
|
|
38
|
|
|
42
|
|
Intercompany
(d)
|
|
(107)
|
|
|
(99)
|
|
Total waste and
service
|
|
1,327
|
|
|
1,231
|
|
Energy
revenue:
|
|
|
|
|
Energy
sales
|
|
291
|
|
|
288
|
|
Capacity
|
|
52
|
|
|
46
|
|
Total
energy
|
|
343
|
|
|
334
|
|
Recycled metals
revenue:
|
|
|
|
|
Ferrous
|
|
58
|
|
|
48
|
|
Non-ferrous
|
|
37
|
|
|
34
|
|
Total recycled
metals
|
|
95
|
|
|
82
|
|
Other revenue
(e)
|
|
103
|
|
|
105
|
|
Total
revenue
|
|
$
|
1,868
|
|
|
$
|
1,752
|
|
|
|
|
|
|
OPERATING
EXPENSE:
|
|
|
|
|
Plant operating
expense:
|
|
|
|
|
Plant
maintenance
|
|
$
|
299
|
|
|
$
|
311
|
|
Other plant operating
expense
|
|
1,023
|
|
|
960
|
|
Total plant operating
expense
|
|
1,321
|
|
|
1,271
|
|
Other operating
expense
|
|
65
|
|
|
51
|
|
General and
administrative
|
|
115
|
|
|
112
|
|
Depreciation and
amortization
|
|
218
|
|
|
215
|
|
Impairment
charges
|
|
86
|
|
|
2
|
|
Total operating
expense
|
|
$
|
1,805
|
|
|
$
|
1,651
|
|
|
|
|
|
|
Operating
income
|
|
$
|
63
|
|
|
$
|
101
|
|
|
|
|
|
|
Plus: impairment
charges
|
|
86
|
|
|
2
|
|
Operating
income excluding impairment charges
|
|
$
|
149
|
|
|
$
|
103
|
|
|
|
|
|
|
(a) Includes the
operation of material processing facilities and related services
provided by our Covanta Environmental Solutions
business.
|
(b) Consists of
transfer stations and the transportation component of our NYC
Marine Transfer Station contract.
|
(c) Includes waste
brokerage, debt service and other revenue not directly related to
EfW waste processing activities.
|
(d) Consists of
elimination of intercompany transactions primarily relating to
transfer stations.
|
(e) Consists
primarily of construction revenue.
|
|
|
|
|
Note: Certain amounts
may not total due to rounding.
|
|
|
|
|
Covanta Holding
Corporation
|
|
|
|
|
|
|
Exhibit
8
|
Revenue and
Operating Income Changes - FY 2017 to FY 2018
|
|
|
|
|
|
|
(Unaudited, $ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
Transitions (b)
|
|
|
|
|
|
|
|
FY
2017
|
|
Organic Growth
(a)
|
|
%
|
|
Waste
|
|
PPA
|
|
Transactions
(c)
|
|
Total
Changes
|
|
FY
2018
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste and
service:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EfW tip
fees
|
$
|
572
|
|
|
$
|
58
|
|
|
10.1
|
%
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
(10)
|
|
|
$
|
52
|
|
|
$
|
624
|
|
EfW service
fees
|
393
|
|
|
3
|
|
|
0.9
|
%
|
|
(15)
|
|
|
—
|
|
|
43
|
|
|
31
|
|
|
424
|
|
Environmental
services
|
129
|
|
|
11
|
|
|
8.3
|
%
|
|
—
|
|
|
—
|
|
|
1
|
|
|
12
|
|
|
141
|
|
Municipal
services
|
194
|
|
|
13
|
|
|
6.9
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
207
|
|
Other
|
42
|
|
|
(4)
|
|
|
(10.3)
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
38
|
|
Intercompany
|
(99)
|
|
|
(8)
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
(107)
|
|
Total waste and
service
|
1,231
|
|
|
72
|
|
|
5.9
|
%
|
|
(11)
|
|
|
—
|
|
|
34
|
|
|
96
|
|
|
1,327
|
|
Energy
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
sales
|
288
|
|
|
20
|
|
|
6.8
|
%
|
|
2
|
|
|
(12)
|
|
|
(6)
|
|
|
3
|
|
|
291
|
|
Capacity
|
46
|
|
|
2
|
|
|
5.4
|
%
|
|
(3)
|
|
|
7
|
|
|
(1)
|
|
|
6
|
|
|
52
|
|
Total
energy
|
334
|
|
|
21
|
|
|
6.3
|
%
|
|
(1)
|
|
|
(5)
|
|
|
(6)
|
|
|
9
|
|
|
343
|
|
Recycled
metals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
48
|
|
|
10
|
|
|
21.9
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
58
|
|
Non-ferrous
|
34
|
|
|
3
|
|
|
8.4
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
37
|
|
Total recycled
metals
|
82
|
|
|
13
|
|
|
16.2
|
%
|
|
—
|
|
|
—
|
|
|
1
|
|
|
13
|
|
|
95
|
|
Other
revenue
|
105
|
|
|
2
|
|
|
1.8
|
%
|
|
(4)
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
103
|
|
Total
revenue
|
$
|
1,752
|
|
|
$
|
108
|
|
|
6.2
|
%
|
|
$
|
(16)
|
|
|
$
|
(5)
|
|
|
$
|
29
|
|
|
$
|
116
|
|
|
$
|
1,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant operating
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant
maintenance
|
$
|
311
|
|
|
$
|
(15)
|
|
|
(5.0)
|
%
|
|
$
|
(4)
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
(12)
|
|
|
$
|
299
|
|
Other plant operating
expense
|
960
|
|
|
47
|
|
|
4.9
|
%
|
|
(8)
|
|
|
—
|
|
|
23
|
|
|
63
|
|
|
1,023
|
|
Total plant
operating expense
|
1,271
|
|
|
31
|
|
|
2.4
|
%
|
|
(11)
|
|
|
—
|
|
|
31
|
|
|
50
|
|
|
1,321
|
|
Other operating
expense
|
51
|
|
|
6
|
|
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
65
|
|
General and
administrative
|
112
|
|
|
3
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
115
|
|
Depreciation and
amortization
|
215
|
|
|
6
|
|
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
3
|
|
|
218
|
|
Total operating
expense(d)
|
$
|
1,649
|
|
|
$
|
47
|
|
|
|
|
$
|
(5)
|
|
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
71
|
|
|
$
|
1,720
|
|
Operating income
(loss) (d)
|
$
|
103
|
|
|
$
|
62
|
|
|
|
|
$
|
(11)
|
|
|
$
|
(5)
|
|
|
$
|
—
|
|
|
$
|
45
|
|
|
$
|
148
|
|
|
|
(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.
|
(d) Excludes
impairment charges
|
Note: Certain amounts
may not total due to rounding
|
EfW Operating
Metrics (Unaudited)
|
|
|
|
|
|
|
|
Exhibit 9
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Mar
31,
|
|
Jun
30,
|
|
Sep
30,
|
|
Dec
31,
|
|
Dec
31,
|
|
Mar
31,
|
|
Jun
30,
|
|
Sep
30,
|
|
Dec
31,
|
|
Dec
31,
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
EfW
Waste
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tons: (in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tip fee -
contracted
|
2.08
|
|
|
2.32
|
|
|
2.25
|
|
|
2.27
|
|
|
8.92
|
|
|
1.85
|
|
|
2.04
|
|
|
1.99
|
|
|
2.08
|
|
|
7.96
|
|
Tip fee -
uncontracted
|
0.65
|
|
|
0.44
|
|
|
0.46
|
|
|
0.53
|
|
|
2.08
|
|
|
0.57
|
|
|
0.47
|
|
|
0.50
|
|
|
0.52
|
|
|
2.06
|
|
Service
fee
|
2.11
|
|
|
2.31
|
|
|
2.37
|
|
|
2.75
|
|
|
9.54
|
|
|
2.14
|
|
|
2.25
|
|
|
2.20
|
|
|
2.06
|
|
|
8.65
|
|
Total tons
|
4.84
|
|
|
5.07
|
|
|
5.08
|
|
|
5.55
|
|
|
20.54
|
|
|
4.56
|
|
|
4.76
|
|
|
4.68
|
|
|
4.66
|
|
|
18.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EfW tip fee per
ton:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contracted
|
$
|
53.33
|
|
|
$
|
51.52
|
|
|
$
|
52.36
|
|
|
$
|
51.72
|
|
|
$
|
52.20
|
|
|
$
|
48.68
|
|
|
$
|
54.05
|
|
|
$
|
52.75
|
|
|
$
|
58.30
|
|
|
$
|
52.87
|
|
Uncontracted
|
$
|
65.38
|
|
|
$
|
84.05
|
|
|
$
|
80.27
|
|
|
$
|
78.58
|
|
|
$
|
75.97
|
|
|
$
|
68.45
|
|
|
$
|
76.02
|
|
|
$
|
73.98
|
|
|
$
|
71.35
|
|
|
$
|
72.25
|
|
Average revenue per
ton
|
$
|
56.20
|
|
|
$
|
56.68
|
|
|
$
|
57.13
|
|
|
$
|
56.78
|
|
|
$
|
56.70
|
|
|
$
|
54.11
|
|
|
$
|
57.13
|
|
|
$
|
57.03
|
|
|
$
|
60.06
|
|
|
$
|
57.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EfW
Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy sales: (MWh in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contracted
|
0.52
|
|
|
0.52
|
|
|
0.53
|
|
|
0.55
|
|
|
2.12
|
|
|
0.59
|
|
|
0.59
|
|
|
0.63
|
|
|
0.65
|
|
|
2.45
|
|
Hedged
|
0.75
|
|
|
0.81
|
|
|
0.77
|
|
|
0.76
|
|
|
3.09
|
|
|
0.61
|
|
|
0.67
|
|
|
0.66
|
|
|
0.76
|
|
|
2.71
|
|
Market
|
0.33
|
|
|
0.30
|
|
|
0.33
|
|
|
0.36
|
|
|
1.32
|
|
|
0.22
|
|
|
0.17
|
|
|
0.20
|
|
|
0.22
|
|
|
0.80
|
|
Total energy
sales
|
1.60
|
|
|
1.62
|
|
|
1.62
|
|
|
1.67
|
|
|
6.52
|
|
|
1.42
|
|
|
1.43
|
|
|
1.49
|
|
|
1.63
|
|
|
5.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market sales by
geography:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PJM East
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.6
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
NEPOOL
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
0.2
|
|
NYISO
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Other
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
Revenue per MWh:
(excludes capacity)
|
Contracted
|
$
|
67.86
|
|
|
$
|
64.81
|
|
|
$
|
65.41
|
|
|
$
|
68.21
|
|
|
$
|
66.59
|
|
|
$
|
70.85
|
|
|
$
|
67.70
|
|
|
$
|
66.58
|
|
|
$
|
72.23
|
|
|
$
|
69.36
|
|
Hedged
|
$
|
50.07
|
|
|
$
|
25.99
|
|
|
$
|
28.24
|
|
|
$
|
27.89
|
|
|
$
|
32.88
|
|
|
$
|
47.76
|
|
|
$
|
29.02
|
|
|
$
|
32.25
|
|
|
$
|
32.11
|
|
|
$
|
34.92
|
|
Market
|
$
|
44.08
|
|
|
$
|
30.86
|
|
|
$
|
33.66
|
|
|
$
|
38.98
|
|
|
$
|
37.12
|
|
|
$
|
24.44
|
|
|
$
|
27.80
|
|
|
$
|
25.79
|
|
|
$
|
36.94
|
|
|
$
|
28.84
|
|
Average revenue per
MWh
|
$
|
54.56
|
|
|
$
|
39.28
|
|
|
$
|
41.48
|
|
|
$
|
43.58
|
|
|
$
|
44.68
|
|
|
$
|
53.76
|
|
|
$
|
44.83
|
|
|
$
|
45.83
|
|
|
$
|
48.69
|
|
|
$
|
48.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tons recovered, net:
(in thousands)
|
|
|
|
|
|
|
|
|
Ferrous
|
101.9
|
|
|
106.6
|
|
|
111.4
|
|
|
104.2
|
|
|
424.0
|
|
|
95.4
|
|
|
97.7
|
|
|
97.8
|
|
|
104.6
|
|
|
395.5
|
|
Non-ferrous
|
11.1
|
|
|
11.7
|
|
|
12.9
|
|
|
13.6
|
|
|
49.3
|
|
|
8.9
|
|
|
9.3
|
|
|
10.3
|
|
|
9.8
|
|
|
38.3
|
|
Tons sold, net: (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
76.6
|
|
|
81.4
|
|
|
89.8
|
|
|
85.1
|
|
|
332.8
|
|
|
60.0
|
|
|
68.4
|
|
|
80.9
|
|
|
92.4
|
|
|
301.7
|
|
Non-ferrous
|
7.5
|
|
|
7.0
|
|
|
6.8
|
|
|
9.2
|
|
|
30.6
|
|
|
9.3
|
|
|
4.7
|
|
|
8.3
|
|
|
9.0
|
|
|
31.3
|
|
Revenue per ton: ($
in millions)
|
|
|
|
|
|
|
|
|
Ferrous
|
$
|
193
|
|
|
$
|
182
|
|
|
$
|
159
|
|
|
$
|
162
|
|
|
$
|
173
|
|
|
$
|
169
|
|
|
$
|
152
|
|
|
$
|
158
|
|
|
$
|
151
|
|
|
$
|
157
|
|
Non-ferrous
|
$
|
1,192
|
|
|
$
|
1,432
|
|
|
$
|
1,360
|
|
|
$
|
971
|
|
|
$
|
1,218
|
|
|
$
|
615
|
|
|
$
|
892
|
|
|
$
|
1,201
|
|
|
$
|
1,570
|
|
|
$
|
1,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EfW plant
operating expenses: ($ in millions)
|
Plant operating
expenses - gross
|
$
|
282
|
|
|
$
|
264
|
|
|
$
|
240
|
|
|
$
|
271
|
|
|
$
|
1,057
|
|
|
$
|
275
|
|
|
$
|
254
|
|
|
$
|
232
|
|
|
$
|
264
|
|
|
$
|
1,025
|
|
Less: Client
pass-through costs
|
(14)
|
|
|
(12)
|
|
|
(12)
|
|
|
(19)
|
|
|
(57)
|
|
|
(10)
|
|
|
(13)
|
|
|
(14)
|
|
|
(22)
|
|
|
(59)
|
|
Less: REC sales -
contra-expense
|
(3)
|
|
|
(3)
|
|
|
(4)
|
|
|
(4)
|
|
|
(12)
|
|
|
(3)
|
|
|
(2)
|
|
|
(3)
|
|
|
(5)
|
|
|
(13)
|
|
Plant operating
expenses - reported
|
$
|
266
|
|
|
$
|
250
|
|
|
$
|
224
|
|
|
$
|
248
|
|
|
$
|
988
|
|
|
$
|
262
|
|
|
$
|
239
|
|
|
$
|
215
|
|
|
$
|
237
|
|
|
$
|
953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 financial 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
additional ways of viewing aspects of operations that, when viewed
with the GAAP results provide a more complete understanding of our
core business. As we define it, Adjusted EBITDA represents earnings
before interest, taxes, depreciation and amortization, as adjusted
for additional items subtracted from or added to net income
including the effects of impairment losses, gains or losses on
sales, dispositions or retirements of assets, adjustments to
reflect the Adjusted EBITDA from our unconsolidated investments,
adjustments to exclude significant unusual or non-recurring items
that are not directly related to our operating performance plus
adjustments to capital type expenses for our service fee facilities
in line with our credit agreements. We adjust for these items in
our Adjusted EBITDA as our management believes that these items
would distort their ability to efficiently view and assess our core
operating trends. As larger parts of our business are conducted
through unconsolidated investments that we do not control, we
adjust EBITDA for our proportionate share of the entities
depreciation and amortization, interest expense and taxes in order
to improve comparability to the Adjusted EBITDA of our wholly owned
entities.
In order to provide a meaningful basis for comparison, we are
providing information with respect to our Adjusted EBITDA for the
year ended December 31, 2018 and 2017, 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 projections of the proportional contribution of our
interests in the JV to our Adjusted EBITDA and Free Cash Flow are
not based on GAAP net income/loss or Cash flow provided by
operating activities, respectively, and are anticipated to be
adjusted to exclude the effects of events or circumstances in 2018
that are not representative or indicative of our results of
operations and that are not currently determinable. Due to the
uncertainty of the likelihood, amount and timing of any such
adjusting items, we do not have information available to provide a
quantitative reconciliation of projected net income/loss to an
Adjusted EBITDA projection.
Free Cash Flow
Free Cash Flow is defined as cash flow
provided by operating activities, plus changes in operating
restricted funds, 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
year ended December 31, 2018 and 2017, 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 year
ended December 31, 2018 and 2017, 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 may constitute
"forward-looking" statements as defined in Section 27A of the
Securities Act of 1933, as amended (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 of Covanta and
the JV 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 Covanta's ability
to renew or replace expiring contracts at comparable prices and
with other acceptable terms;
- adoption of new laws and regulations in the United States and abroad, including energy
laws, tax laws, environmental laws, labor laws and healthcare
laws;
- 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 Covanta's
facilities and Covanta's ability to retain the rights to operate
facilities Covanta does not own;
- Covanta's and the joint ventures ability to avoid adverse
publicity or reputational damage relating to its business;
- difficulties in the financing, development and construction of
new projects and expansions, including increased construction costs
and delays;
- Covanta's ability to realize the benefits of long-term business
development and bear the costs of business development over
time;
- Covanta's ability to utilize net operating loss
carryforwards;
- limits of insurance coverage;
- Covanta's ability to avoid defaults under its long-term
contracts;
- performance of third parties under its 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 Covanta's existing indebtedness and its
ability to perform its financial obligations and guarantees and to
refinance its existing indebtedness;
- exposure to counterparty credit risk and instability of
financial institutions in connection with financing
transactions;
- the scalability of its business;
- restrictions in its certificate of incorporation and debt
documents regarding strategic alternatives;
- failures of disclosure controls and procedures and internal
controls over financial reporting;
- Covanta's and the joint ventures 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 Covanta's businesses
described periodic securities filings by Covanta with the SEC.
Although Covanta believes that its plans, cost estimates,
returns on investments, 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 forward-looking statements. Covanta's and the joint ventures
future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and to
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.
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SOURCE Covanta