Covanta Holding Corporation reports 2012 full year and fourth quarter results

Thursday, February 7, 2013
  • Record year in terms of EfW Boiler availability.
  • Acquired ~2,700 ton per day Delaware Valley EfW facility; immediately accretive to key metrics.

Covanta Holding Corporation (NYSE: CVA), a leading global owner and operator of Energy-from-Waste ("EfW") projects, reported financial results today for the three and twelve months ended December 31, 2012.

Full Year
Continuing Operations 2011 2012 2012 Guidance1
(Unaudited, $ in millions, except per share amounts)
Revenue $ 1,650 $ 1,644 N/A
Income from Continuing Operations $ 84 $ 118 N/A
Adjusted EBITDA $ 494 $ 492 $ 490 - $ 500
Free Cash Flow $ 282 $ 262 $ 250 - $ 265
Adjusted EPS $ 0.54 $ 0.52 $ 0.50 - $ 0.55

1 As of November 7, 2012.

Key Full Year 2012 Highlights:

  • Record year in terms of EfW Boiler availability;
  • Signed $2.5 billion of waste and energy contracts with average term of 12 years -- secured two million tons of waste and 750,000 MWh of generation per year;
  • Acquired ~2,700 ton per day Delaware Valley EfW facility; immediately accretive to key metrics;
  • Successfully refinanced $1.9 billion in debt, creating substantial financial flexibility;
  • Honolulu EfW project expansion successfully commenced commercial operation; and
  • Doubled dividend to $0.60/share annually; shareholder returns totaled $169 million.

Commenting on Covanta's 2012 results, Anthony Orlando, Covanta's President and CEO stated, "I'm pleased with both our 2012 operating performance and the execution of organic growth initiatives. This good work enabled us to offset the drop in energy and metals markets, as well as the impact of Hurricane Sandy. We also had a great year extending long-term waste and energy contracts. Our contracted revenue base, combined with our continued investment in organic growth initiatives, positions us to grow in the coming year. Our guidance calls for 5% Adjusted EBITDA growth in 2013, and maintaining our strong Free Cash Flow. Our focus is on investing in the business for the long-term, and we see a number of exciting opportunities that will allow us to grow this year and beyond."

Full Year 2012 Results

For the twelve months ended December 31, 2012, total operating revenues declined slightly to $1,644 million from $1,650 million in 2011. This was primarily due to the negative impacts of:

  • Lower revenues earned explicitly to service project debt;
  • Lower pricing for energy at EfW facilities and recycled metals; and
  • Hurricane Sandy impact, as certain facilities were briefly forced off-line.

These impacts were substantially offset by:

  • Organic growth initiatives in special waste, recycled metals and other;
  • Escalations in service fee contracts; and
  • New units coming online.

Excluding certain items2, operating expenses were $1,420 million for 2012 compared to $1,427 million for 2011. The $7 million decrease was primarily due to:

  • The benefits from various operational improvements.

Offset by:

  • Expenses related to Hurricane Sandy for repairs at facilities; and
  • Lower alternative fuel tax credits.

Excluding the items noted above, and the net operating income negative effect of Hurricane Sandy of $9 million in 2012, operating income was $233 million for the year ended December 31, 2012, or an increase of $10 million compared to the prior year period. Operating income improved due to:

  • Organic growth initiatives; and
  • New units coming online.

Partially offset by:

  • Lower debt service pass through revenue;
  • Lower pricing for EfW energy and recycled metal; and
  • Lower alternative fuel tax credits.

Adjusted EBITDA declined $2 million to $492 million primarily due to lower debt service pass through revenue, lower EfW energy and lower recycled metal pricing, lower alternative fuel tax credits, and the impact of Hurricane Sandy, mostly offset by organic growth initiatives, and new units coming online.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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