Covanta Holding Corporation Reports 2012 First Quarter Results
Year-Over-Year Improvement in All Key Metrics 2012 Guidance Reaffirmed
(firmenpresse) - MORRISTOWN, NJ -- (Marketwire) -- 04/18/12 -- Covanta Holding Corporation (NYSE: CVA) ("Covanta" or the "Company"), a leading global owner and operator of Energy-from-Waste ("EfW") projects, reported unaudited financial results today for the three months ended March 31, 2012.
Key Q1 2012 Financial Highlights:
Revenue increased by 4% to $392 million
Adjusted EBITDA increased by $2 million to $73 million
Free Cash Flow increased by $10 million to $76 million
Completed $1.6 billion of financing transactions at attractive terms
Doubled the quarterly cash dividend to $0.15 per share ($0.60 per share annually)
Completed $30 million of share repurchases
Key Q1 2012 Operational Highlights:
Realigned senior management structure with a strategic focus on organic growth, new technology and business development initiatives
Successfully extended several important contracts
Early evidence of executing on organic growth plan
Commenting on the first quarter of 2012, Anthony Orlando, Covanta's President and CEO stated, "Our operational and financial performance continues to be predictably strong and our clients continue to demonstrate their confidence in Covanta by extending important contracts. In addition, I am very pleased with the progress we are making on our organic growth and other initiatives which continue to gain traction."
Orlando further commented, "We are on track for the year. While the significant drop in natural gas markets continues to garner headlines, the impact to our business this year should be relatively modest because we remain highly contracted on energy, and are effectively executing our organic growth initiatives."
Operating revenues grew $15 million, or 4%, to $392 million, compared to the prior year. The increase was primarily attributed to higher construction revenues, increased revenue from service fee contract escalations and increased recycled metal revenues due to organic growth initiatives which increased volume as well as higher pricing from improved quality. These increases more than offset lower debt service revenue and lower market energy pricing at our EfW facilities.
Operating expenses of $389 million increased by 3% from $379 million in the prior year period. The increase was primarily attributed to higher construction expenses, normal cost escalations and lower alternative fuel tax credits. The Company was able to partially offset these factors through various operational improvements, as well as the timing of plant maintenance activities.
Operating income was up $5 million to $3 million versus a loss of $2 million in the prior year. This increase was driven by our organic growth initiatives for recycled metals and various operational improvements, as well as increased energy production at our EfW facilities and timing of plant maintenance activities. These drivers more than offset lower energy pricing, reduction in alternative fuel tax credits, lower debt service pass through revenue and the impact of the biomass plants.
Adjusted EBITDA of $73 million was up $2 million compared to the prior year.
Free Cash Flow was $76 million, up 15% from $66 million in the prior year. The increase was primarily due to timing of working capital.
Adjusted EPS of $(0.09) improved by $0.01 versus the prior year period, primarily due to higher operating income.
In March 2012, Covanta announced that the Board of Directors authorized a 100% increase in the quarterly cash dividend to $0.15 per share, which represents a $0.60 per share cash dividend on an annualized basis. In addition, the Board of Directors also increased the share repurchase authorization by $100 million, further demonstrating the Company's commitment to return capital to shareholders.
During the quarter, the Company returned $51 million to shareholders, by means of $21 million in dividends declared and $30 million in share repurchases (1.3% of common stock outstanding). As of March 31, 2012, Covanta had $145 million of share repurchase authorization remaining.
During the first quarter, the Company issued $400 million of new 6.375% Senior Notes Due 2022 and also redeemed all outstanding amounts of its 1.00% Senior Convertible Debentures due 2027 ($25 million outstanding as of December 31, 2011). In addition, the Company entered into new senior secured credit facilities at its subsidiary, Covanta Energy Corporation ("Covanta Energy"), totaling $1.2 billion, which was comprised of a new $900 million Revolving Credit Facility due 2017 and a new $300 million Term Loan due 2019.
The proceeds from these offerings were used to pay the amounts outstanding on Covanta Energy's previously existing term loan due 2014 ($619 million outstanding as of December 31, 2011), leaving approximately $55 million in excess proceeds after transaction expenses. The new $900 million Revolving Credit Facility replaces the previous $300 million revolving credit facility and $320 million funded letter of credit facility, resulting in over $600 million of undrawn and available liquidity at closing.
"I'm incredibly pleased with the outcome of our refinancing activities during the quarter. We were able to close the deal quickly, allowing us to take advantage of market conditions and increase our liquidity at very attractive rates. We now have over $600 million of undrawn capacity to support our long-term growth objectives," said Sanjiv Khattri, Covanta's Chief Financial Officer. "As evidenced by our actions during the quarter, we remain committed to returning excess capital to shareholders and believe that our $0.60 per share annualized cash dividend and our share repurchase program will reward investors, while we continue to grow our business."
In April, the Company completed the sale of its interests in the Haripur facility in Bangladesh, the fourth and final of the Asia IPP assets designated as assets held for sale. With this sale, Covanta has realized total gross proceeds of $281 million from all four asset sales, within the range of $270 to $290 million gross proceeds announced at the onset of the asset sales. In 2011, $137 million of the net proceeds was repatriated tax efficiently to the US and was part of the pool of funds used to repurchase over $230 million of common stock, with the remaining proceeds held overseas for potential international growth investment.
The Company is reaffirming its previously announced guidance for 2012 for the following financial metrics:
Covanta will host a conference call at 8:30 am (Eastern) on Thursday, April 19, 2012 to discuss its first quarter results. The conference call will begin with prepared remarks, which will be followed by a question and answer session. To participate, please dial 877-806-3982 approximately 10 minutes prior to the scheduled start of the call. If calling from outside of the United States, please dial 702-928-7062. Please utilize conference ID number 68607350 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 on the Investor Relations section of the Covanta website at .
A replay of the conference call will be available from 11:30 AM (Eastern) Thursday, April 19, 2012. To access the replay, please dial 855-859-2056 or 800-585-8367, or from outside of the United States 404-537-3406 and use the replay conference ID number 68607350. The webcast will also be archived on .
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 46 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 create more than 9 billion pounds of steam that are sold to a variety of industries. For more information, visit .
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 and its subsidiaries, or general industry or broader economic performance in global markets in which Covanta operates or competes, 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 assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to Covanta, include, but are not limited to, the risk that Covanta may not successfully grow its business as expected or close its announced or planned acquisitions or projects in development, and those factors, risks and uncertainties that are described in periodic securities 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 forward-looking statements. Covanta's 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.
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.
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 March 31, 2012 of our most significant subsidiary, 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 March 31, 2012, 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 for continuing operations.
Under the credit facilities as of March 31, 2012, 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 March 31, 2012. Failure to comply with such financial covenants could result in a default under these credit facilities, which default would have a material adverse affect 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 months ended March 31, 2012 and 2011, reconciled for each such periods to net loss from continuing operations and cash flow provided by operating activities from continuing operations, which are believed to be the most directly comparable measures under GAAP.
Free Cash Flow is defined as cash flow provided by operating activities from continuing operations 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 months ended March 31, 2012 and 2011, reconciled for each such periods to cash flow provided by operating activities from continuing operations, which we believe to be the most directly comparable measure under GAAP.
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 (Loss) 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 write-down of assets, 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 months ended March 31, 2012 and 2011, reconciled for each such periods to diluted earnings per share from continuing operations, which is believed to be the most directly comparable measure under GAAP.
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Datum: 18.04.2012 - 20:01 Uhr
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