MORRISTOWN, N.J., Oct. 26, 2017 /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, 2017.
|
Three Months
Ended
September 30,
|
|
2016
|
|
2017
|
|
(Unaudited, $ in
millions, except per share amounts)
|
Revenue
|
$421
|
|
$429
|
Net income
|
$54
|
|
$15
|
Adjusted
EBITDA
|
$124
|
|
$117
|
Net cash provided by
operating activities
|
$88
|
|
$88
|
Free Cash
Flow
|
$74
|
|
$68
|
Diluted
EPS
|
$0.42
|
|
$0.11
|
Adjusted
EPS
|
$0.18
|
|
$0.12
|
|
Reconciliations of
non-GAAP measures can be found in the exhibits to this press
release.
|
Key Highlights
- Reaffirming 2017 guidance
- Dublin has commenced
commercial operations and is performing in line with
expectations
- Fairfax expected to return to service around year-end 2017
- Continued strong waste and metals market environment
"This quarter marks a great milestone for Covanta as our
state-of-the-art Dublin plant is
now operational and performing very impressively. It has been
a long journey, but the end result is a testament to our
development and operational capabilities. I couldn't be more proud
of our team for its tireless efforts on this project." said
Stephen J. Jones, Covanta's
President and CEO. "At Fairfax we are now installing upgraded
fire protection and suppression equipment and expect to bring the
plant back online around the end of the year. At the same time, our
plants are enjoying strong markets for waste and metals and we
remain on pace to meet our full-year expectations. "
More detail on our third quarter results can be found in the
exhibits to this release and in our third quarter 2017 earnings
presentation found in the Investor Relations section of the Covanta
website at www.covanta.com.
2017 Guidance
The Company reaffirmed
guidance for 2017 for the following key metrics:
(In
millions)
|
Metric
|
2016
Actual
|
2017
Guidance Range (1)
|
Adjusted
EBITDA
|
$410
|
$400 -
$440
|
Free Cash
Flow
|
$172
|
$100 -
$150
|
|
(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 will host a
conference call at 8:30 AM (Eastern)
on Friday, October 27, 2017 to discuss its third quarter 2017
results.
The conference call will begin with prepared remarks, which will
be followed by a question and answer session. To participate,
please dial 1-866-393-4306 approximately 10 minutes prior to
the scheduled start of the call. If calling outside of
the United States, please dial
1-734-385-2616. 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 20 million tons of waste from municipalities
and businesses into clean, renewable electricity to power one
million homes and recycle over 550,000 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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited)
(In millions, except per share amounts)
|
OPERATING
REVENUE:
|
|
|
|
|
|
|
|
Waste and service
revenue
|
$
|
306
|
|
|
$
|
299
|
|
|
$
|
902
|
|
|
$
|
875
|
|
Energy
revenue
|
80
|
|
|
92
|
|
|
241
|
|
|
279
|
|
Recycled metals
revenue
|
23
|
|
|
14
|
|
|
54
|
|
|
44
|
|
Other operating
revenue
|
20
|
|
|
16
|
|
|
60
|
|
|
44
|
|
Total operating
revenue
|
429
|
|
|
421
|
|
|
1,257
|
|
|
1,242
|
|
OPERATING
EXPENSE:
|
|
|
|
|
|
|
|
Plant operating
expense
|
301
|
|
|
272
|
|
|
952
|
|
|
901
|
|
Other operating
expense, net
|
7
|
|
|
14
|
|
|
24
|
|
|
45
|
|
General and
administrative expense
|
24
|
|
|
23
|
|
|
82
|
|
|
71
|
|
Depreciation and
amortization expense
|
51
|
|
|
52
|
|
|
155
|
|
|
155
|
|
Impairment charges
(a)
|
—
|
|
|
—
|
|
|
1
|
|
|
19
|
|
Total operating
expense
|
383
|
|
|
361
|
|
|
1,214
|
|
|
1,191
|
|
Operating
income
|
46
|
|
|
60
|
|
|
43
|
|
|
51
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
Interest expense,
net
|
(35)
|
|
|
(35)
|
|
|
(106)
|
|
|
(103)
|
|
Gain (loss) on asset
sales (a)
|
—
|
|
|
43
|
|
|
(6)
|
|
|
43
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
(13)
|
|
|
—
|
|
Other income
(expense), net
|
2
|
|
|
(1)
|
|
|
2
|
|
|
(1)
|
|
Total other (expense)
income
|
(33)
|
|
|
7
|
|
|
(123)
|
|
|
(61)
|
|
Income (loss)
before income tax benefit (expense) and equity in net (loss)
income from unconsolidated investments
|
13
|
|
|
67
|
|
|
(80)
|
|
|
(10)
|
|
Income tax benefit
(expense)
|
2
|
|
|
(12)
|
|
|
5
|
|
|
(5)
|
|
Equity in net (loss)
income from unconsolidated investments
|
—
|
|
|
(1)
|
|
|
1
|
|
|
3
|
|
Net Income
(Loss)
|
$
|
15
|
|
|
$
|
54
|
|
|
$
|
(74)
|
|
|
$
|
(12)
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
Diluted
|
131
|
|
|
131
|
|
|
129
|
|
|
129
|
|
|
|
|
|
|
|
|
|
Income (Loss) Per
Share
|
|
|
|
|
|
|
|
Basic
|
$
|
0.11
|
|
|
$
|
0.42
|
|
|
$
|
(0.58)
|
|
|
$
|
(0.09)
|
|
Diluted
|
$
|
0.11
|
|
|
$
|
0.42
|
|
|
$
|
(0.58)
|
|
|
$
|
(0.09)
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
As
of
|
|
September 30,
2017
|
|
December 31,
2016
|
|
(Unaudited)
|
|
|
ASSETS
|
(In millions, except per share amounts)
|
Current:
|
|
|
|
Cash and cash
equivalents
|
$
|
37
|
|
|
$
|
84
|
|
Restricted funds held
in trust
|
56
|
|
|
56
|
|
Receivables (less
allowances of $11 million and $9 million, respectively)
|
325
|
|
|
332
|
|
Prepaid expenses and
other current assets
|
93
|
|
|
72
|
|
Total Current
Assets
|
511
|
|
|
544
|
|
Property, plant and
equipment, net
|
3,170
|
|
|
3,024
|
|
Restricted funds held
in trust
|
32
|
|
|
54
|
|
Waste, service and
energy contract intangibles, net
|
254
|
|
|
263
|
|
Other intangible
assets, net
|
38
|
|
|
34
|
|
Goodwill
|
313
|
|
|
302
|
|
Other
assets
|
43
|
|
|
63
|
|
Total
Assets
|
$
|
4,361
|
|
|
$
|
4,284
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current:
|
|
|
|
Current portion of
long-term debt
|
$
|
10
|
|
|
$
|
9
|
|
Current portion of
project debt
|
31
|
|
|
22
|
|
Accounts
payable
|
64
|
|
|
98
|
|
Accrued expenses and
other current liabilities
|
316
|
|
|
289
|
|
Total Current
Liabilities
|
421
|
|
|
418
|
|
Long-term
debt
|
2,365
|
|
|
2,243
|
|
Project
debt
|
445
|
|
|
361
|
|
Deferred income
taxes
|
605
|
|
|
617
|
|
Other
liabilities
|
190
|
|
|
176
|
|
Total
Liabilities
|
4,026
|
|
|
3,815
|
|
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 131 and 130, respectively)
|
14
|
|
|
14
|
|
Additional paid-in
capital
|
821
|
|
|
807
|
|
Accumulated other
comprehensive loss
|
(44)
|
|
|
(62)
|
|
Accumulated
deficit
|
(455)
|
|
|
(289)
|
|
Treasury stock, at
par
|
(1)
|
|
|
(1)
|
|
Total
Equity
|
335
|
|
|
469
|
|
Total Liabilities
and Equity
|
$
|
4,361
|
|
|
$
|
4,284
|
|
|
|
|
|
Covanta Holding
Corporation
|
Exhibit 3
|
Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(Unaudited, in
millions)
|
OPERATING
ACTIVITIES:
|
|
|
|
Net loss
|
$
|
(74)
|
|
|
$
|
(12)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expense
|
155
|
|
|
155
|
|
Amortization of
deferred debt financing costs
|
5
|
|
|
5
|
|
Loss (gain) on asset
sales (a)
|
6
|
|
|
(43)
|
|
Impairment charges
(a)
|
1
|
|
|
19
|
|
Loss on
extinguishment of debt
|
13
|
|
|
—
|
|
Stock-based
compensation expense
|
16
|
|
|
13
|
|
Equity in net income
from unconsolidated investments
|
(1)
|
|
|
(3)
|
|
Deferred income
taxes
|
(7)
|
|
|
3
|
|
Other, net
|
—
|
|
|
3
|
|
Change in restricted
funds held in trust
|
18
|
|
|
22
|
|
Change in working
capital, net of effects of acquisitions
|
(18)
|
|
|
(12)
|
|
Net cash provided by
operating activities
|
114
|
|
|
150
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Purchase of property,
plant and equipment
|
(218)
|
|
|
(282)
|
|
Acquisition of
businesses, net of cash acquired
|
(16)
|
|
|
(9)
|
|
Proceeds from asset
sales
|
—
|
|
|
107
|
|
Property insurance
proceeds
|
5
|
|
|
2
|
|
Other, net
|
(6)
|
|
|
4
|
|
Net cash used in
investing activities
|
(235)
|
|
|
(178)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Proceeds from
borrowings on long-term debt
|
400
|
|
|
—
|
|
Proceeds from
borrowings on revolving credit facility
|
806
|
|
|
658
|
|
Proceeds from
borrowing on Dublin project financing
|
71
|
|
|
139
|
|
Payments of
borrowings on revolving credit facility
|
(676)
|
|
|
(623)
|
|
Payments on long-term
debt
|
(413)
|
|
|
(2)
|
|
Payments on equipment
financing capital leases
|
(4)
|
|
|
(3)
|
|
Payments on project
debt
|
(20)
|
|
|
(17)
|
|
Payment of deferred
financing costs
|
(9)
|
|
|
(5)
|
|
Cash dividends paid
to stockholders
|
(98)
|
|
|
(98)
|
|
Change in restricted
funds held in trust
|
4
|
|
|
19
|
|
Common stock
repurchased
|
—
|
|
|
(20)
|
|
Other, net
|
9
|
|
|
(4)
|
|
Net cash provided by
financing activities
|
70
|
|
|
44
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
4
|
|
|
1
|
|
Net (decrease)
increase in cash and cash equivalents
|
(47)
|
|
|
17
|
|
Cash and cash
equivalents at beginning of period
|
84
|
|
|
96
|
|
Cash and cash
equivalents at end of period
|
$
|
37
|
|
|
$
|
113
|
|
|
|
|
|
(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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited, in millions)
|
Net Income
(Loss)
|
$
|
15
|
|
|
$
|
54
|
|
|
$
|
(74)
|
|
|
$
|
(12)
|
|
Depreciation and
amortization expense
|
51
|
|
|
52
|
|
|
155
|
|
|
155
|
|
Interest expense,
net
|
35
|
|
|
35
|
|
|
106
|
|
|
103
|
|
Income tax (benefit)
expense
|
(2)
|
|
|
12
|
|
|
(5)
|
|
|
5
|
|
Impairment charges
(a)
|
—
|
|
|
—
|
|
|
1
|
|
|
19
|
|
(Gain) loss on asset
sales (b)
|
—
|
|
|
(43)
|
|
|
6
|
|
|
(43)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
Property insurance
recoveries, net (c)
|
1
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
Adjustments for
changes in working capital and other items:
|
|
|
|
|
|
|
|
Capital type
expenditures at service fee operated facilities
(d)
|
10
|
|
|
6
|
|
|
36
|
|
|
29
|
|
Debt service billings
in excess of revenue recognized
|
2
|
|
|
1
|
|
|
4
|
|
|
3
|
|
Severance and
reorganization costs
|
—
|
|
|
1
|
|
|
1
|
|
|
3
|
|
Stock-based
compensation expense
|
5
|
|
|
4
|
|
|
16
|
|
|
13
|
|
Other non-cash
items
|
—
|
|
|
—
|
|
|
3
|
|
|
4
|
|
Other
(e)
|
—
|
|
|
2
|
|
|
1
|
|
|
3
|
|
Subtotal other
adjustments
|
17
|
|
|
14
|
|
|
61
|
|
|
55
|
|
Total
adjustments
|
102
|
|
|
70
|
|
|
335
|
|
|
294
|
|
Adjusted
EBITDA
|
$
|
117
|
|
|
$
|
124
|
|
|
$
|
261
|
|
|
$
|
282
|
|
Capital type
expenditures at service fee operated facilities
(d)
|
(10)
|
|
|
(6)
|
|
|
(36)
|
|
|
(29)
|
|
Cash paid for
interest, net of capitalized interest
|
(33)
|
|
|
(24)
|
|
|
(100)
|
|
|
(91)
|
|
Cash paid for taxes,
net
|
1
|
|
|
(3)
|
|
|
—
|
|
|
(7)
|
|
Adjustment for
working capital and other
|
13
|
|
|
(3)
|
|
|
(11)
|
|
|
(5)
|
|
Net cash provided
by operating activities
|
$
|
88
|
|
|
$
|
88
|
|
|
$
|
114
|
|
|
$
|
150
|
|
|
(a)
During the nine months ended September 30, 2016, we recorded
a non-cash impairment totaling $19 million, which primarily
consisted of $13
million
related to the previously planned closure of our Pittsfield
EfW facility in March 2017, which we now continue to operate and $3
million
related to
an investment in a joint
venture to recover and recycle metals. See Results of Operations
- Impairment charges discussion above.
|
(b)
During the nine months ended September 30, 2017, we recorded a
$6 million charge for indemnification claims related to the sale of
our interests
in China, which was
completed in 2016. During the three months ended September
30, 2016, we recorded a $41 million gain on the sale of our
interests in
China.
|
(c)
During the nine months ended September 30, 2017, we
recorded a $2 million property insurance gain related to our
property insurance recoveries.
|
(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
Net Cash Provided by Operating Activities to Free Cash
Flow
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
Full
Year
Estimated 2017
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(Unaudited, in millions)
|
|
|
Net cash provided by
operating activities
|
$
|
88
|
|
|
$
|
88
|
|
|
$
|
114
|
|
|
$
|
150
|
|
|
$210 -
$270
|
Less: Maintenance
capital expenditures (a)
|
(20)
|
|
|
(14)
|
|
|
(84)
|
|
|
(82)
|
|
|
(110) -
(120)
|
Free Cash
Flow
|
$
|
68
|
|
|
$
|
74
|
|
|
$
|
30
|
|
|
$
|
68
|
|
|
$100 -
$150
|
|
|
|
|
|
|
|
|
|
|
Uses of Free Cash
Flow
|
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
Growth investments
(b)
|
$
|
(43)
|
|
|
$
|
(84)
|
|
|
$
|
(138)
|
|
|
$
|
(209)
|
|
|
|
Property insurance
proceeds
|
—
|
|
|
2
|
|
|
5
|
|
|
2
|
|
|
|
Capital expenditures
associated with property insurance events
|
(4)
|
|
|
—
|
|
|
(13)
|
|
|
—
|
|
|
|
Other investing
activities, net
|
(2)
|
|
|
4
|
|
|
(5)
|
|
|
6
|
|
|
|
Total
investments
|
$
|
(49)
|
|
|
$
|
(78)
|
|
|
$
|
(151)
|
|
|
$
|
(201)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return of capital to
stockholders:
|
|
|
|
|
|
|
|
|
|
Cash dividends paid
to stockholders
|
$
|
(33)
|
|
|
$
|
(33)
|
|
|
$
|
(98)
|
|
|
$
|
(98)
|
|
|
|
Common stock
repurchased
|
—
|
|
|
—
|
|
|
—
|
|
|
(20)
|
|
|
|
Total return of
capital to stockholders
|
$
|
(33)
|
|
|
$
|
(33)
|
|
|
$
|
(98)
|
|
|
$
|
(118)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital raising
activities:
|
|
|
|
|
|
|
|
|
|
Net proceeds from
issuance of corporate debt (c)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
393
|
|
|
$
|
—
|
|
|
|
Net proceeds from
Dublin financing
|
11
|
|
|
60
|
|
|
69
|
|
|
134
|
|
|
|
Change in restricted
funds held in trust
|
2
|
|
|
4
|
|
|
2
|
|
|
17
|
|
|
|
Proceeds from sale of
China assets
|
—
|
|
|
105
|
|
|
—
|
|
|
105
|
|
|
|
Net proceeds from
capital raising activities
|
$
|
13
|
|
|
$
|
169
|
|
|
$
|
464
|
|
|
$
|
256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
repayments:
|
|
|
|
|
|
|
|
|
|
Net cash used for
scheduled principal payments on corporate
debt
|
$
|
(1)
|
|
|
$
|
(1)
|
|
|
$
|
(3)
|
|
|
$
|
(2)
|
|
|
|
Net cash used for
principal payments on project debt (d)
|
(11)
|
|
|
(11)
|
|
|
(18)
|
|
|
(15)
|
|
|
|
Voluntary prepayment
of corporate debt
|
—
|
|
|
—
|
|
|
(410)
|
|
|
—
|
|
|
|
Payments of equipment
financing capital leases
|
(2)
|
|
|
(1)
|
|
|
(4)
|
|
|
(3)
|
|
|
|
Total debt
repayments
|
$
|
(14)
|
|
|
$
|
(13)
|
|
|
$
|
(435)
|
|
|
$
|
(20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing
activities - Revolving credit facility, net
|
$
|
(2)
|
|
|
$
|
(110)
|
|
|
$
|
130
|
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financing
activities, net
|
5
|
|
|
(3)
|
|
|
9
|
|
|
(4)
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1
|
|
|
(1)
|
|
|
4
|
|
|
1
|
|
|
|
Net change in cash
and cash equivalents
|
$
|
(11)
|
|
|
$
|
5
|
|
|
$
|
(47)
|
|
|
$
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
Maintenance capital
expenditures
|
$
|
(20)
|
|
|
$
|
(14)
|
|
|
$
|
(84)
|
|
|
$
|
(82)
|
|
|
|
Capital expenditures
associated with construction of Dublin
EfW facility
|
(35)
|
|
|
(59)
|
|
|
(91)
|
|
|
(132)
|
|
|
|
Capital expenditures
associated with organic growth initiatives
|
(7)
|
|
|
(16)
|
|
|
(27)
|
|
|
(38)
|
|
|
|
Capital expenditures
associated with the New York City MTS
contract
|
—
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
|
Capital expenditures
associated with Essex County EfW
emissions control system
|
—
|
|
|
(9)
|
|
|
(3)
|
|
|
(27)
|
|
|
|
Total capital
expenditures associated with growth investments
|
(42)
|
|
|
(84)
|
|
|
(121)
|
|
|
(200)
|
|
|
|
Capital expenditures
associated with property insurance events
|
(4)
|
|
|
—
|
|
|
(13)
|
|
|
—
|
|
|
|
Total purchases of
property, plant and equipment
|
$
|
(66)
|
|
|
$
|
(98)
|
|
|
$
|
(218)
|
|
|
$
|
(282)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
$
|
(42)
|
|
|
$
|
(84)
|
|
|
$
|
(121)
|
|
|
$
|
(200)
|
|
|
|
Asset and business
acquisitions
|
(1)
|
|
|
—
|
|
|
(17)
|
|
|
(9)
|
|
|
|
Total growth
investments
|
$
|
(43)
|
|
|
$
|
(84)
|
|
|
$
|
(138)
|
|
|
$
|
(209)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Excludes borrowings under Revolving
Credit Facility. Calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from
borrowings on long-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
$
|
—
|
|
|
|
Less: Financing costs
related to issuance of long-term debt
|
—
|
|
|
—
|
|
|
(7)
|
|
|
—
|
|
|
|
Net proceeds from
issuance of corporate debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
393
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Calculated
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total principal
payments on project debt
|
$
|
(8)
|
|
|
$
|
(8)
|
|
|
$
|
(20)
|
|
|
$
|
(17)
|
|
|
|
Change in related
restricted funds held in trust
|
(3)
|
|
|
(3)
|
|
|
2
|
|
|
2
|
|
|
|
Net cash used for
principal payments on project debt
|
$
|
(11)
|
|
|
$
|
(11)
|
|
|
$
|
(18)
|
|
|
$
|
(15)
|
|
|
|
Covanta Holding
Corporation
|
Exhibit
6
|
Reconciliation of
Diluted Loss Per Share to Adjusted EPS
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited)
|
Diluted Income (Loss)
Per Share
|
$
|
0.11
|
|
|
$
|
0.42
|
|
|
$
|
(0.58)
|
|
|
$
|
(0.09)
|
|
Reconciling Items
(a)
|
0.01
|
|
|
(0.24)
|
|
|
0.11
|
|
|
(0.14)
|
|
Adjusted
EPS
|
$
|
0.12
|
|
|
$
|
0.18
|
|
|
$
|
(0.47)
|
|
|
$
|
(0.23)
|
|
|
|
|
|
|
|
|
|
(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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited)
(In millions, except per share amounts)
|
Reconciling Items
|
|
|
|
|
|
|
|
Impairment charges
(a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
19
|
|
(Gain) loss on asset
sales (a)
|
—
|
|
|
(43)
|
|
|
6
|
|
|
(43)
|
|
Property insurance
recoveries (a)
|
1
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
Severance and
reorganization costs
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
Effect on income of
derivative instruments not designated as hedging
instruments
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Effect of foreign
exchange loss on indebtedness
|
(1)
|
|
|
—
|
|
|
(2)
|
|
|
(1)
|
|
Total Reconciling
Items, pre-tax
|
—
|
|
|
(42)
|
|
|
17
|
|
|
(21)
|
|
Pro forma income tax
impact (b)
|
—
|
|
|
10
|
|
|
(5)
|
|
|
2
|
|
Grantor trust
activity
|
1
|
|
|
1
|
|
|
(2)
|
|
|
1
|
|
Total Reconciling
Items, net of tax
|
$
|
1
|
|
|
$
|
(31)
|
|
|
$
|
14
|
|
|
$
|
(18)
|
|
Diluted Per Share
Impact
|
$
|
0.01
|
|
|
$
|
(0.24)
|
|
|
$
|
0.11
|
|
|
$
|
(0.14)
|
|
Weighted Average
Diluted Shares Outstanding
|
131
|
|
|
131
|
|
|
129
|
|
|
129
|
|
|
|
|
|
|
|
|
|
(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 and applicable blended state rate.
|
Covanta Holding
Corporation
|
|
|
Exhibit
7
|
Supplemental
Information
|
|
|
|
(Unaudited, $ in
millions)
|
|
|
|
|
Three Months
Ended
September 30,
|
|
2017
|
|
2016
|
Revenue:
|
|
|
|
Waste and
service:
|
|
|
|
EfW waste
processing
|
$
|
238
|
|
|
$
|
241
|
|
Environmental
services (a)
|
32
|
|
|
26
|
|
Municipal services
(b)
|
50
|
|
|
48
|
|
Other revenue
(c)
|
12
|
|
|
10
|
|
Intercompany
(d)
|
(26)
|
|
|
(26)
|
|
Total waste and
service
|
306
|
|
|
299
|
|
Energy:
|
|
|
|
Energy
Sales
|
68
|
|
|
81
|
|
Capacity
|
12
|
|
|
11
|
|
Total energy
revenue
|
80
|
|
|
92
|
|
Recycled
metals:
|
|
|
|
Ferrous
|
13
|
|
|
8
|
|
Non-ferrous
|
10
|
|
|
6
|
|
Total recycled
metals
|
23
|
|
|
14
|
|
Other
revenue
|
20
|
|
|
16
|
|
Total
revenue
|
$
|
429
|
|
|
$
|
421
|
|
|
|
|
|
Operating
expense:
|
|
|
|
Plant operating
expense:
|
|
|
|
Plant
maintenance
|
$
|
57
|
|
|
$
|
48
|
|
Other plant operating
expense
|
243
|
|
|
224
|
|
Total plant operating
expense
|
301
|
|
|
272
|
|
Other operating
expense
|
7
|
|
|
14
|
|
General and
administrative
|
24
|
|
|
23
|
|
Depreciation and
amortization
|
51
|
|
|
52
|
|
Total operating
expense
|
$
|
383
|
|
|
$
|
361
|
|
|
|
|
|
Operating
Income
|
$
|
46
|
|
|
$
|
60
|
|
|
|
|
|
|
|
|
|
(a) Includes the
operation of material processing facilities and related
services.
|
(b) Consists of
transfer stations and transportation component of NYC MTS
contract.
|
(c) Includes waste
brokerage, debt service and other revenue unrelated to EfW waste
processing.
|
(d) Consists of
elimination of intercompany transactions primarily relating to
transfer stations.
|
Note: Certain amounts
may not total due to rounding.
|
Covanta Holding
Corporation
|
|
|
|
|
|
|
|
|
|
|
Exhibit
8
|
Revenue and
Operating Income Changes - Q3 2016 to Q3 2017
|
|
|
|
|
|
|
|
|
(Unaudited, $ in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Growth
(a)
|
|
Contract
Transitions (b)
|
|
|
|
|
|
|
|
Q3
2016
|
|
Total
|
|
%
|
|
Waste
|
|
PPA
|
|
Trans-
actions (c)
|
|
Total
Changes
|
|
Q3
2017
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste and
service:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EfW waste
processing
|
$
|
241
|
|
|
$
|
(5)
|
|
|
-2.3
|
%
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3)
|
|
|
$
|
238
|
|
Environmental
services
|
26
|
|
|
4
|
|
|
14.4
|
%
|
|
—
|
|
|
—
|
|
|
3
|
|
|
6
|
|
|
32
|
|
Municipal
services
|
48
|
|
|
2
|
|
|
4.7
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
50
|
|
Other
revenue
|
10
|
|
|
3
|
|
|
26.6
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
12
|
|
Intercompany
|
(26)
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26)
|
|
Total waste and
service
|
299
|
|
|
3
|
|
|
0.9
|
%
|
|
2
|
|
|
—
|
|
|
3
|
|
|
8
|
|
|
306
|
|
Energy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
Sales
|
81
|
|
|
(7)
|
|
|
-8.1
|
%
|
|
1
|
|
|
(7)
|
|
|
—
|
|
|
(13)
|
|
|
68
|
|
Capacity
|
11
|
|
|
2
|
|
|
20.7
|
%
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
1
|
|
|
12
|
|
Total energy
revenue
|
92
|
|
|
(4)
|
|
|
-4.3
|
%
|
|
1
|
|
|
(9)
|
|
|
—
|
|
|
(12)
|
|
|
80
|
|
Recycled
metals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
8
|
|
|
4
|
|
|
52.5
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
13
|
|
Non-ferrous
|
6
|
|
|
4
|
|
|
74.2
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
10
|
|
Total recycled
metals
|
14
|
|
|
9
|
|
|
61.3
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
23
|
|
Other
revenue
|
16
|
|
|
4
|
|
|
26.2
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
20
|
|
Total
revenue
|
$
|
421
|
|
|
$
|
12
|
|
|
2.7
|
%
|
|
$
|
3
|
|
|
$
|
(9)
|
|
|
$
|
3
|
|
|
$
|
9
|
|
|
$
|
429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant operating
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant
maintenance
|
$
|
48
|
|
|
$
|
9
|
|
|
18.1
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
57
|
|
Other plant operating
expense
|
224
|
|
|
18
|
|
|
8.0
|
%
|
|
2
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
243
|
|
Total plant
operating expense
|
272
|
|
|
27
|
|
|
9.8
|
%
|
|
2
|
|
|
—
|
|
|
1
|
|
|
29
|
|
|
301
|
|
Other
operating
expense (income)
|
14
|
|
|
—
|
|
|
|
|
(8)
|
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
7
|
|
General and
administrative
|
23
|
|
|
1
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
24
|
|
Depreciation and
amortization
|
52
|
|
|
(1)
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
Total operating
expense (income)
|
$
|
361
|
|
|
$
|
27
|
|
|
|
|
$
|
(6)
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
22
|
|
|
$
|
383
|
|
Operating
Income
(Loss) excluding
Impairment Charges
|
$
|
60
|
|
|
$
|
(16)
|
|
|
|
|
$
|
9
|
|
|
$
|
(9)
|
|
|
$
|
2
|
|
|
$
|
(13)
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Reflects
performance 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, new projects and the
addition or loss of operating contracts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Excludes
impairment charges.
|
Note: Certain amounts
may not total due to rounding.
|
North America -
Operating Metrics
|
|
|
Exhibit
9
|
(Unaudited)
|
|
|
|
|
Three Months
Ended
September 30,
|
|
2017
|
|
2016
|
EfW
Waste
|
|
|
|
Tons: (in
millions)
|
|
|
|
Contracted
|
4.2
|
|
|
4.6
|
|
Uncontracted
|
0.5
|
|
|
0.5
|
|
Total tons
|
4.7
|
|
|
5.1
|
|
Revenue per
ton:
|
|
|
|
Contracted
|
$
|
47.63
|
|
|
$
|
44.21
|
|
Uncontracted
|
$
|
77.62
|
|
|
$
|
76.76
|
|
Average revenue per
ton
|
$
|
50.82
|
|
|
$
|
47.45
|
|
EfW
Energy
|
|
|
|
Energy sales: (MWh
in millions)
|
|
|
|
Contracted
|
0.6
|
|
|
0.8
|
|
Hedged
|
0.7
|
|
|
0.5
|
|
Market
|
0.2
|
|
|
0.2
|
|
Total energy
sales
|
1.5
|
|
|
1.5
|
|
Market sales by
geography:
|
|
|
|
PJM East
|
—
|
|
|
0.1
|
|
NEPOOL
|
0.1
|
|
|
—
|
|
NYISO
|
—
|
|
|
—
|
|
Other
|
0.1
|
|
|
0.1
|
|
Revenue per MWh
(excludes capacity):
|
|
|
|
Contracted
|
$
|
66.58
|
|
|
$
|
65.82
|
|
Hedged
|
$
|
32.25
|
|
|
$
|
37.98
|
|
Market
|
$
|
25.79
|
|
|
$
|
37.32
|
|
Average revenue per
MWh
|
$
|
45.83
|
|
|
$
|
52.63
|
|
Metals
|
|
|
|
Tons Recovered:
(in thousands)
|
|
|
|
Ferrous
|
98
|
|
|
101
|
|
Non-ferrous
|
10
|
|
|
9
|
|
Tons Sold: (in
thousands)
|
|
|
|
Ferrous
|
81
|
|
|
72
|
|
Non-ferrous
|
8
|
|
|
10
|
|
Revenue per
ton:
|
|
|
|
Ferrous
|
$
|
158
|
|
|
$
|
117
|
|
Non-ferrous
|
$
|
1,201
|
|
|
$
|
581
|
|
EfW plant
operating expense: ($ in millions)
|
|
|
|
Plant operating
expense - gross
|
$
|
234
|
|
|
$
|
217
|
|
Less: Client
pass-through costs
|
(14)
|
|
|
(9)
|
|
Less: REC sales -
contra-expense
|
(3)
|
|
|
(2)
|
|
Plant operating
expense - reported
|
$
|
216
|
|
|
$
|
205
|
|
Client pass-throughs
as % of gross costs
|
6.0
|
%
|
|
4.3
|
%
|
|
|
|
|
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, 2017 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, 2017, 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, 2017,
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,
2017. Failure to comply with such financial covenants could
result in a default under these credit facilities, which default
would have a material adverse effect 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, 2017 and 2016,
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 2017 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 2017 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 2017 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, 2017 and 2016,
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, 2017 and 2016,
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,
2016 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