Date: April 22, 2009
Source: Covanta Holding Corporation
First Quarter Results
"We were pleased with the performance of our business in light of the
difficult economic conditions. Results were consistent with our expectations.
Consequently, we are reaffirming our full year guidance," said
For the three months ended
Domestic waste and service revenues declined by
Domestic electricity revenue was up
Domestic operating expenses were up
International segment revenue decreased 34% or
Adjusted EBITDA was
1) a
2) a
3) a
Cash Flow Provided by Operating Activities ("Operating Cash Flow") was
Our balance sheet remains very strong, with
"As anticipated, our first quarter performance reflected the drop in recycled metal, energy and waste disposal prices. In addition, we continued to ramp up our international development to pursue promising opportunities and we spent money on recently acquired facilities which will pay future dividends. Overall, the business continues to perform well and we expect to generate significant free cash flow in 2009 while maintaining our relentless pursuit of long-term value creation and growth initiatives," stated Mr. Orlando.
2009 Guidance
The Company is reaffirming its guidance for 2009 for the following key metrics:
Operating Cash Flow in the range of
Adjusted EBITDA of
Diluted earnings per share of
Conference Call Information
A replay of the conference call will be available from
About
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
Covanta Holding Corporation Exhibit 1
Condensed Consolidated Statements of Income
Three Months Ended
March 31,
---------
2009 2008(A)
-------- ---------
(As Adjusted)
(Unaudited)
(In thousands, except per share amounts)
Operating revenues
Waste and service revenues $206,269 $217,623
Electricity and steam sales 141,869 153,065
Other operating revenues 10,622 18,078
-------- ---------
Total operating revenues 358,760 388,766
-------- ---------
Operating expenses
Plant operating expenses 256,042 259,011
Depreciation and amortization
expense 51,498 48,574
Net interest expense on project
debt 12,769 13,761
General and administrative
expenses 25,515 24,154
Other operating expenses 9,744 12,501
-------- ---------
Total operating expenses 355,568 358,001
-------- ---------
Operating income 3,192 30,765
-------- ---------
Other income (expense)
Investment income 1,028 1,640
Interest expense (9,506) (15,199)
-------- ----------
Total other expenses (8,478) (13,559)
-------- ---------
(Loss) income before income tax
benefit (expense), equity in net
income from unconsolidated
investments, and noncontrolling
interests in subsidiaries (5,286) 17,206
Income tax benefit (expense) 1,992 (6,905)
Equity in net income from
unconsolidated investments 5,809 5,492
-------- ---------
Net Income 2,515 15,793
-------- ---------
Less: Net income attributable to
noncontrolling interests in
subsidiaries (1,380) (1,869)
-------- ---------
Net Income Attributable to
Covanta Holding Corporation $1,135 $13,924
======== =========
Earnings Per Share:
Basic $0.01 $0.09
======== =========
Weighted Average Shares 153,467 153,165
======== =========
Diluted $0.01 $0.09
======== =========
Weighted Average Shares 154,737 154,572
======== =========
(A) See Note 1 - Organization and Basis of Presentation of the Notes to
the Condensed Consolidated Financial Statements included in our
Quarterly Report on Form 10-Q for the first quarter ended March 31,
2009 for a discussion of the retrospective accounting changes
resulting from the adoption of FASB Staff Position No. APB 14-1 and
Statement of Financial Accounting Standards No. 160 which were
effective January 1, 2009 .
Covanta Holding Corporation Exhibit 2
Reconciliation of Net Income to Adjusted EBITDA
Three Months Ended
March 31,
--------- Full Year
2009 2008(A) Estimated 2009
------- ------- --------------
(As Adjusted)
(Unaudited, in thousands)
Net Income Attributable
to Covanta Holding
Corporation $1,135 $13,924 $117,000 - $141,000
Depreciation and
amortization expense 51,498 48,574 188,000 - 194,000
Debt service:
Net interest
expense on
project debt 12,769 13,761
Interest expense 9,506 15,199
Investment income (1,028) (1,640)
-------- --------
Subtotal debt
service 21,247 27,320 84,000 - 79,000
Income tax (benefit)
expense (1,992) 6,905 76,000 - 80,000
Other adjustments: (B)
Change in unbilled
service
receivables 4,700 2,052
Non-cash
compensation
expense 3,907 3,651
Other 545 2,040
-------- --------
Subtotal other
adjustments 9,152 7,743 29,000 - 38,000
Noncontrolling
interests in
subsidiaries 1,380 1,869 6,000 - 8,000
-------- --------
Total adjustments 81,285 92,411
-------- -------- ---------------------
Adjusted EBITDA $82,420 $106,335 $500,000 - $540,000
======== ======== =====================
(A) See Note 1 - Organization and Basis of Presentation of the Notes to
the Condensed Consolidated Financial Statements included in our
Quarterly Report on Form 10-Q for the first quarter ended March 31,
2009 for a discussion of the retrospective accounting change resulting
from the adoption of FASB Staff Position No. APB 14-1 which was
effective January 1, 2009 .
(B) These items represent amounts that are non-cash in nature.
Covanta Holding Corporation Exhibit 3
Reconciliation of Cash Flow Provided by Operating Activities to Adjusted
EBITDA
Three Months Ended
March 31,
---------- Full Year
2009 2008(A) Estimated 2009
------- ------- --------------
(As Adjusted)
(Unaudited, in thousands)
Cash flow provided by
operating activities $51,395 $49,706 $325,000 - $375,000
Debt service 21,247 27,320 84,000 - 79,000
Amortization of debt premium
and deferred financing costs 1,178 1,839 7,000
Other 8,600 27,470 84,000 - 79,000
------- -------- -----------------
Adjusted EBITDA $82,420 $106,335 $500,000 - $540,000
======= ======== ===================
(A) See Note 1 - Organization and Basis of Presentation of the Notes to
the Condensed Consolidated Financial Statements included in our
Quarterly Report on Form 10-Q for the first quarter ended March 31,
2009 for a discussion of the retrospective accounting change resulting
from the adoption of FASB Staff Position No. APB 14-1 which was
effective January 1, 2009 .
Covanta Holding Corporation Exhibit 4
Statements of Cash Flows Selected Data
Three Months Ended
March 31,
---------- Full Year
2009 2008(A) Estimated 2009
------- ------- --------------
(As Adjusted)
(Unaudited, in thousands)
Cash flow provided by
operating activities $51,395 $49,706 $325,000 - $375,000
Uses of cash flow provided
by operating activities
Purchase of property,
plant and equipment (B)
Capital expenditures
associated with
SEMASS fire (C) $(251) $(1,190)
Capital expenditures
associated with
certain
acquisitions (D) (358) (7,993)
Capital expenditures
associated with
technology
development (E) (249) -
Pre-construction
development
projects (F) (1,955) -
All other capital
expenditures (G) (24,020) (29,807) $(60,000)
------- -------
Total purchases of
property, plant and
equipment $(26,833) $(38,990)
Purchase of equity
interests $(1,083) $ -
Principal payments on
long-term debt $(1,675) $(1,691) $(7,000)
Principal payments on
project debt $(45,268) $(55,119) $(169,000)
(A) See Note 1 - Organization and Basis of Presentation of the Notes to
the Condensed Consolidated Financial Statements included in our
Quarterly Report on Form 10-Q for the first quarter ended March 31,
2009 for a discussion of the retrospective accounting change resulting
from the adoption of FASB Staff Position No. APB 14-1 which was
effective January 1, 2009 .
(B) Purchase of property, plant and equipment is also referred to as
Capital Expenditures.
(C) Capital Expenditures were incurred that related to the repair and
replacement of assets at the SEMASS energy-from-waste facility that
were damaged by a fire on March 31, 2007 . The cost of repair or
replacement was insured under the terms of the applicable insurance
policy, subject to deductibles. Settlement of the property damage
insurance claim occurred in December 2008 .
(D) In June 2008 , Covanta acquired an energy-from-waste facility in Tulsa,
Oklahoma . This facility was shut down by the prior owner in the
summer of 2007 and two of the facility's three boilers were returned
to service in November 2008 . Covanta invested approximately $0.4
million in capital improvements to restore the operational performance
of this facility during the quarter ended March 31, 2009 . Capital
Expenditures were also incurred in 2008 at three facilities that
Covanta acquired in 2008 and 2007 primarily to improve the
productivity or environmental performance of those facilities.
Covanta invested approximately $7.5 million during the quarter ended
March 31, 2008 in two California biomass facilities acquired in July
2007 .
Although, in accordance with GAAP, this spending will be recorded as a
component of purchase of property, plant and equipment on Covanta's
statement of cash flows, management considers this spending as a
component of the cost to acquire these businesses since these major
capital improvements are required to achieve desired facility
performance.
(E) Capital Expenditures related to internal development efforts and/or
agreements with multiple partners for the development, testing or
licensing of new technologies related to the transformation of waste
materials into renewable fuels, the generation of alternative energy
methods, and nitrogen oxide (NOx) emission controls.
(F) Covanta has entered into definitive agreements for the development of
a 1,700 metric ton per day energy-from-waste project serving the City
of Dublin, Ireland and surrounding communities. Construction is
expected to commence in 2009. Covanta incurred capital expenditures
related to pre-construction activities, such as site preparation
costs, for this project.
(G) Capital Expenditures primarily to maintain existing facilities.
Discussion of Non-GAAP Financial Measures
To supplement our results prepared in accordance with
We use a number of different financial measures, both GAAP and non-GAAP,
in assessing the overall performance of our business. We use Adjusted EBITDA
to provide further information that is useful to an understanding of the
financial covenants contained in the credit facilities of our most significant
subsidiary,
Adjusted EBITDA should not be considered as an alternative to net income or an alternative to cash flow provided by operating activities as indicators of our performance or liquidity or any other measures of performance or liquidity derived in accordance with GAAP.
Adjusted EBITDA
The calculation of Adjusted EBITDA is based on the definition in Covanta Energy's credit facilities, 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 these credit facilities, 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
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 declines
for quarterly periods after
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 months ended
For more information, contact:
Vice President, Investor Relations and Corporate Communications
973-882-4196
or
Director, Media
973-882-2439,
both of
http://www.covantaholding.com.
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