MORRISTOWN, NJ--(Marketwired - Apr 17, 2013) - Covanta Holding Corporation (
| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| (Unaudited, $ in millions, except per share amounts) | ||||||||
| Revenue | $ | 373 | $ | 392 | ||||
| Net Loss | $ | (26 | ) | $ | (11 | ) | ||
| Adjusted EBITDA | $ | 58 | $ | 74 | ||||
| Free Cash Flow | $ | 25 | $ | 77 | ||||
| Adjusted EPS | $ | (0.21 | ) | $ | (0.09 | ) | ||
Q1 2013 Highlights :
- Organic growth initiatives on track
- Unfavorable impact of increased maintenance activity
- Raised cash dividend by 10% to $0.165 per share ($0.66 per share annually)
- Increased buyback authorization to $150 million
- Reaffirming FY2013 guidance
Commenting on Covanta's results, Anthony Orlando, President and Chief Executive Officer stated, "Our organic growth initiatives are on track, we're seeing the benefit of improving energy markets and our business model remains very stable. As such, I'm confident that we'll finish the year within our guidance range." Orlando continued, "We typically conduct a large portion of our scheduled plant maintenance during the first quarter but this year the percentage of our planned work was even higher than last year. Furthermore, we had to make some unplanned repairs which caused additional downtime. The timing of planned maintenance will reverse in the second half and we're working to offset the impact of the unplanned downtime."
Q1 2013 Results Operating revenues declined $19 million, or 5%, to $373 million, compared to the prior year. This decline was primarily due to lower construction revenue and downtime due to increased maintenance activity, partially offset by the benefits from higher energy prices and from organic growth initiatives.
Operating expenses decreased by $11 million to $378 million. The improvement was primarily due to lower construction expense, a gain related to the elimination of the defined benefit pension obligation, and the benefits from organic growth initiatives, partially offset by increased plant maintenance expense primarily due to timing.
Operating loss was $5 million, compared to operating income of $3 million in the prior year. This decrease was primarily due to increased maintenance activity including timing noted above, partially offset by a gain related to the elimination of the defined benefit pension plan obligation.
Adjusted EBITDA decreased by $16 million to $58 million, due to increased maintenance activity including the associated revenue reduction. Approximately $9 million of the decrease was due to unplanned maintenance and the remainder was primarily due to timing of planned maintenance which is expected to reverse by the end of the year.
Free Cash Flow decreased by $52 million to $25 million for the three month comparative period. The decline was primarily driven by the timing of construction working capital and the decline in Adjusted EBITDA.
Adjusted EPS declined by $0.12 to $(0.21) versus $(0.09) in the prior year period, primarily due to lower operating income and higher interest expense as a result of the refinancings completed in 2012.
Shareholder Returns and Liquidity During the first quarter, the Company increased its quarterly cash dividend by 10% to $0.165 per share ($0.66 per share on an annual basis) and returned $46 million to shareholders, consisting of $22 million in cash dividends declared and $24 million in share repurchases (0.9% of common stock outstanding). Since the inception of its buyback program the Company has repurchased 27.0 million shares, or 17.5% of shares outstanding, at a weighted average cost of $16.15 per share. As of March 31, 2013, Covanta had $126 million of share repurchase authorization remaining.
The Company amended its $297 million senior secured term loan B in the first quarter to reduce its interest rate by 0.50% at current rates, consisting of a reduction in the LIBOR margin from 3.00% to 2.75% and a reduction in the LIBOR floor from 1.00% to 0.75%.
Sanjiv Khattri, Covanta's Executive Vice-President and Chief Financial Officer, commented, "While we remain focused on allocating capital to generate value-enhancing growth, we again demonstrated our commitment to returning excess capital to shareholders with our actions during the quarter. In addition, we were pleased with two small transactions: the repricing of our term loan which will reduce our ongoing interest cost and the elimination of our pension obligation."
2013 Full Year Guidance The Company is reaffirming its guidance for 2013 for the following key metrics:
| (In millions, except per share amounts) | ||||||
| Metric | FY2012 Actual | FY2013 Guidance Range | % Change At Midpoint | |||
| Adjusted EBITDA | $ 492 | $ 500 - $ 530 | 5% | |||
| Free Cash Flow | $ 262 | $ 250 - $ 280 | 1% | |||
| Adjusted EPS | $ 0.52 | $ 0.40 - $ 0.50 | (13)% | |||
Conference Call Information Covanta will host a conference call at 8:30 am (Eastern) on Thursday, April 18, 2013 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 800-860-2442 approximately 10 minutes prior to the scheduled start of the call. If calling from Canada, please dial 866-605-3852 . If calling outside of the United States and Canada, please dial 412-858-4600 . Please request the "Covanta Holding Corporation 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 on the Investor Relations section of the Covanta website at www.covantaenergy.com .
A replay will be available one hour after the end of the conference call through 9:00 AM (Eastern) Friday, April 26, 2013. To access the replay, please dial 877-344-7529 , or from outside of the United States 412-317-0088 and use the replay conference ID number 10027173. The webcast will also be archived on www.covantaenergy.com .
About Covanta
Covanta Holding Corporation (
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. For additional information see the Cautionary Note Regarding Forward-Looking Statements at the end of the Exhibits.
| Exhibit 1 | ||||||||||
| Covanta Holding Corporation | ||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||
| Three Months Ended March 31, | ||||||||||
| 2013 | 2012 | |||||||||
| (Unaudited) (In millions, except per share amounts) | ||||||||||
| Operating revenues | ||||||||||
| Waste and service revenues | $ | 231 | $ | 238 | ||||||
| Recycled metals revenues | 16 | 20 | ||||||||
| Electricity and steam sales | 102 | 91 | ||||||||
| Other operating revenues | 24 | 43 | ||||||||
| Total operating revenues | 373 | 392 | ||||||||
| Operating expenses | ||||||||||
| Plant operating expenses | 281 | 267 | ||||||||
| Other operating expenses | 17 | 39 | ||||||||
| General and administrative expenses | 24 | 25 | ||||||||
| Depreciation and amortization expense | 53 | 50 | ||||||||
| Net interest expense on project debt | 3 | 8 | ||||||||
| Total operating expenses | 378 | 389 | ||||||||
| Operating (loss) income | (5 | ) | 3 | |||||||
| Other income (expense) | ||||||||||
| Interest expense | (29 | ) | (18 | ) | ||||||
| Non-cash convertible debt related expense | (7 | ) | (6 | ) | ||||||
| Loss on extinguishment of debt | (1 | ) | (2 | ) | ||||||
| Other income, net | - | 3 | ||||||||
| Total other expenses | (37 | ) | (23 | ) | ||||||
| Loss before income tax benefit and equity in net income from unconsolidated investments | (42 | ) | (20 | ) | ||||||
| Income tax benefit | 17 | 8 | ||||||||
| Equity in net (loss) income from unconsolidated investments | (1 | ) | 1 | |||||||
| Net Loss | (26 | ) | (11 | ) | ||||||
| Less: Net loss (income) attributable to noncontrolling interests in subsidiaries | 1 | (1 | ) | |||||||
| Net Loss Attributable to Covanta Holding Corporation | $ | (25 | ) | $ | (12 | ) | ||||
| Weighted Average Common Shares Outstanding: | ||||||||||
| Basic | 130 | 134 | ||||||||
| Diluted | 130 | 134 | ||||||||
| Loss Per Share: | ||||||||||
| Basic | $ | (0.19 | ) | $ | (0.09 | ) | ||||
| Diluted | $ | (0.19 | ) | $ | (0.09 | ) | ||||
| Cash Dividend Declared Per Share: | $ | 0.165 | $ | 0.15 | ||||||
| Supplemental Information - Non-GAAP | ||||||||||
| Adjusted EPS (a) | $ | (0.21 | ) | $ | (0.09 | ) | ||||
| (a) | For additional information, see Exhibit 4 of this Press Release. |
| Exhibit 1A | |||||||||
| Covanta Holding Corporation | |||||||||
| Condensed Consolidated Statements of Comprehensive Loss | |||||||||
| Three Months Ended March 31, | |||||||||
