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Covanta Cuts Full-Year Earnings in Wake of Sandy

Date: November 7, 2012

Source: Covanta Holding Corp.

Covanta Holding Corp. (Morristown, NJ) revised its expected earnings for the year after Hurricane Sandy disrupted operations or caused damage at 12 of its East Coast energy facilities. The company said that two sites in New Jersey suffered flood damage and had to be shut down temporarily, while others were damaged by the wind. All have resumed normal operations except for a facility in Essex, NJ which is expected to restart shortly. The company revised full-year earnings estimates downward to between $0.50 and $0.55 per share from a previous guidance of between $0.55 and $0.60 per share. "Given the unprecedented scale of this storm, we are grateful that all of our employees are safe and that we sustained so little damage," said Chief Executive Anthony Orlando.

 

PRESS RELEASE
November 7, 2012

Covanta Provides Update on Hurricane Sandy

Revises Guidance Due to Storm Impact

Covanta Holding Corporation (NYSE: CVA) ("Covanta" or the "Company"), a world leader in sustainable waste management and renewable energy, today provided a business update reflecting the effects of Hurricane Sandy.

All company employees are safe and the Company does not expect any long-term effects from Hurricane Sandy. Many of Covanta's North America facilities are located on the eastern seaboard and 12 of these facilities suffered temporary business interruption or wind damage from the storm. The Union and Essex, New Jersey facilities also suffered flood damage causing the facilities to temporarily shut-down. All facilities have now resumed normal operations with the exception of the Essex facility where the Company expects to resume operations within the week.

"Given the unprecedented scale of this storm, we are grateful that all of our employees are safe and that we sustained so little damage. I'm proud of the way our employees prepared and responded. We are now working closely with our clients to help in their clean-up and waste disposal efforts," said Anthony Orlando, Covanta's CEO and President. "Our hearts go out to all those affected by the storm and we're committed to support the restoration efforts of our project communities," Orlando concluded.

The disruption caused by the hurricane will result in a short term reduction in revenue, as well as increased expenses relating to repair and restart. The Company is assessing the full financial impact of the storm. Based on current analysis, it now expects to finish the year below the low end of the previously announced guidance ranges. Therefore, the Company is updating the following guidance ranges:

  • Adjusted EBITDA is expected to be $490 million to $500 million (versus previous guidance range of $500 million to $515 million)

  • Adjusted EPS is expected to be $0.50 to $0.55 per share (versus previous guidance range of $0.55 to $0.60 per share)

The Company anticipates that it will finish the year within the previously announced Free Cash Flow range of $250 million to $265 million, primarily due to the benefit of its recently-announced refinancing, which will offset the adverse impact of the hurricane.

About Covanta

Covanta Holding Corporation (NYSE: CVA) is an internationally recognized owner and operator of large-scale Energy-from-Waste and renewable energy projects and a recipient of the Energy Innovator Award from the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy. Covanta's 44 Energy-from-Waste facilities provide communities with an environmentally sound solution to their solid waste disposal needs by using that municipal solid waste to generate clean, renewable energy. Annually, Covanta's modern Energy-from-Waste facilities safely and securely convert approximately 20 million tons of waste into 9 million megawatt hours of clean renewable electricity and approximately 9 billion pounds of steam that are sold to a variety of industries. For more information, visit www.covantaenergy.com.

 

Covanta Holding Corporation   Exhibit 1
Reconciliation of Net Income to Adjusted EBITDA    
Unaudited, in millions    
     
 
 		  
 		 Full Year
Estimated 2012(a)		   Revised Full Year
Estimated 2012(b)
         
Net Income from Continuing Operations Attributable to Covanta Holding Corporation   $63 - $70   $58 - $63
         
Net loss related to insurance subsidiaries, net of tax   9   9
         
Depreciation and amortization expense   196 - 192   196 - 192
         
Debt service:        
  Net interest expense on project debt        
  Interest expense        
  Non-cash convertible debt related expense        
  Investment income        
Subtotal debt service   150 - 145   150 - 145
         
Income tax expense   53 - 61   48 - 53
         
Write-off of intangible liability   (29)   (29)
         
Development costs   11   11
         
Write-off of renewable fuels project   16   16
         
Loss on extinguishment of debt   2   2
         
Net income loss attributable to noncontrolling interests in subsidiaries   1 - 3   1 - 3
         
Other adjustments:        
  Debt service billings in excess of revenue recognized        
  Non-cash compensation expense        
  Other non-cash items        
Subtotal other adjustments   28 - 35   28 - 35
         
Total adjustments        
Adjusted EBITDA   $500 - $515   $490 - $500
         
         
(a) 2012 guidance as presented on October 17, 2012    
(b) Revised 2012 guidance as presented on November 7, 2012    
 
 

 

Covanta Holding Corporation   Exhibit 2
Reconciliation of Diluted Earnings Per Share to Adjusted EPS    
Unaudited, in millions except per share amounts    
     
 
 		  
 		 Full Year
Estimated 2012(a)		   Revised Full Year
Estimated 2012(b)
         
Continuing Operations - Diluted Earnings Per Share   $0.48 - $0.53   $0.43 - $0.48
Reconciling Items   0.07   0.07
Adjusted EPS   $0.55 - $0.60   $0.50 - $0.55
         
(a) 2012 guidance as presented on October 17, 2012    
(b) Revised 2012 guidance as presented on November 7, 2012    
         
Reconciling Items        
Operating loss related to insurance subsidiaries   $ 9   $ 9
Write-off of intangible liability   (29)   (29)
Write-off of renewable fuels project   16   16
Development costs   11   11
Loss on extinguishment of debt   2   2
Effect on income of derivative instruments not designated as hedging instruments   (1)   (1)
Effect of foreign exchange gain on indebtedness   (3)   (3)
Other   1   1
Total Reconciling Items, pre-tax   6   6
Proforma income tax impact   2   2
Grantor trust activity   -   -
  Total Reconciling Items, net of tax   $ 8   $ 8
         
Diluted Earnings Per Share Impact   $ 0.07   $ 0.07
Weighted Average Diluted Shares Outstanding   134   134
         
         

 

Covanta Holding Corporation  Exhibit 3
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow    
     
 
 		   Full Year
Estimated 2012(a)
     
Cash flow provided by operating activities from continuing operations   $326 -$351
  Plus: Cash flow used in operating activities from insurance subsidiaries   4
  Less: Maintenance capital expenditures   (80) - (90)
Free Cash Flow   $250 -$265
     
     
(a) 2012 guidance as presented on October 17, 2012 and reaffirmed on November 7, 2012.  
     
     

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