FEBRUARY 22, 2010 - COVANTA HOLDING CORPORATION REPORTS 2009 FOURTH QUARTER AND FULL-YEAR RESULTS; ESTABLISHES 2010 GUIDANCE
2009 Operating Cash Flow of $397 Million Exceeds Guidance
FAIRFIELD, NJ, February 22, 2010 – Covanta Holding Corporation (NYSE:CVA) (“Covanta” or the “Company”) reported financial results today for the three and twelve months ended December 31, 2009.
Anthony Orlando, President and CEO of Covanta noted that, “Our base business demonstrated strength and resiliency by generating more free cash flow than our prior best year in spite of lower recycled metal and energy prices. In addition, we made excellent progress on our growth initiatives by acquiring Veolia’s North American Energy-from-Waste business and breaking ground on strategic new Energy-from-Waste capacity on three continents. This performance is a real credit to all of Covanta’s outstanding employees.”
Fourth Quarter Results
For the three months ended December 31, 2009, consolidated operating revenues decreased 2% to $407 million, down from $414 million in the prior year comparative period.
Revenues from the Americas segment increased $16 million, or 5%, to $358 million. New business revenues of $37 million related primarily to the acquisition of Veolia’s North American Energy-from-Waste business (the”Veolia Acquisition”) more than offset the $21 million decline in the existing business revenue.
Operating expenses for the Americas segment increased by $26 million during the quarter. New business operating expenses of $34 million were primarily related to the Veolia Acquisition.
International segment revenue decreased by $24 million in the fourth quarter while plant operating expenses declined by $32 million. The decline in both revenues and operating expenses resulted primarily from lower demand and fuel costs at our Indian facilities.
Adjusted EBITDA was $140 million, compared to $138 million for 2008, an increase of 1%. Fourth quarter 2008 Adjusted EBITDA benefitted from an insurance recovery of $8 million and an $8 million project debt prepayment made by our Stanislaus municipal client. Excluding these benefits in last year’s fourth quarter, Adjusted EBITDA increased by approximately $18 million with a $10 million contribution from the Veolia Acquisition and $10 million from our international operations, offset partially by lower electricity and waste prices.
Cash flow provided by operating activities (“Operating Cash Flow”) was $150 million in the fourth quarter, compared to $132 million in 2008. The fourth quarter 2008 results exclude the $8 million insurance recovery. The approximately $10 million increase in Operating Cash Flow was driven by project dividends and working capital.
Full-Year 2009 Results
For the twelve months ended December 31, 2009, consolidated operating revenues were $1.55 billion down 7% from $1.66 billion in 2008, primarily as a result of lower International segment revenues.
Americas segment revenues declined $25 million or 2% to $1.35 billion. New business revenue was $73 million. Existing business revenues declined by $98 million, largely due to lower pricing on recycled metals, energy and waste.
International segment revenues decreased $95 million during the year while operating expenses declined by $97 million. The decreases in revenues and operating expenses resulted primarily from lower fuel costs at our Indian facilities.
For the year, Operating Cash Flow was $397 million and Free Cash Flow (defined as Operating Cash Flow less maintenance capital expenditures) was $345 million. Operating Cash Flow was nearly flat with the prior year while Free Cash Flow improved slightly.
Adjusted EBITDA was $515 million in 2009 compared to $552 million in the prior year when excluding the benefit of the 2008 insurance recovery and the Stanislaus project debt prepayment. This decline was driven largely by lower recycled metal and energy prices off-set by the Veolia Acquisition.
Net income was $102 million compared to $129 million in 2008. 2009 diluted EPS was $0.66 compared to $0.83 in the prior year.
At year end, the Company’s balance sheet remained strong and had ample liquidity with $434 million of unrestricted cash, $278 million of restricted cash (of which $166 million is designated for future project debt principal repayment), and an undrawn $300 million revolving credit facility.
“We anticipate 2010 Adjusted EBITDA to increase modestly driven by last year’s acquisitions and organic growth, off-set by head winds related to contract transitions and our decision to increase development spending,” stated Anthony Orlando. He continued, “This is an important year for our development activities, particularly in the U.K. where we are vigorously pursuing several large Energy-from-Waste opportunities. I’m confident our investment in long-term growth will bear fruit. In addition, we’re advocating for U.S. Renewable Electricity Standards that would accelerate our growth.”
2010 Guidance
The Company is establishing guidance for 2010 for the following key metrics:
- Free Cash Flow in the range of $300 million to $340 million;
- Adjusted EBITDA of $520 million to $560 million; and
- Diluted earnings per share of $0.55 to $0.75.
Please note that we have elected to provide Free Cash Flow guidance rather than guidance relating to Operating Cash Flow for 2010. We are focused on generating cash and believe that Free Cash Flow is a more useful metric for evaluating the liquidity of the business as it represents cash that is available to invest in growth and repay debt.
Conference Call Information
Covanta will host a conference call at 8:30 am (Eastern) on Tuesday, February 23, 2010 to discuss its results for the three and twelve months ended December 31, 2009. Prepared remarks 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 and when prompted, enter the passcode 53809407. If you are calling from outside of the United States, please dial 702-928-7062 and use the same passcode. The conference call will also be web cast live on the Investor Relations section of the Covanta website at www.covantaholding.com.
A replay of the conference call will be available from 11:30 am (Eastern) on Tuesday, February 23, 2010 through midnight (Eastern) on Tuesday, March 2, 2010. To access the replay, please dial 800-642-1687 or, from outside of the United States, please dial 706-645-9291 and use the replay passcode: 53809407. The webcast will also be archived on www.covantaholding.com and available for MP3 download.
Additional Information
The Company’s annual report on Form 10-K will be filed with the Securities and Exchange Commission on February 22, 2010. Printed copies of this document are available free of charge. Requests can be submitted at http://investors.covantaholding.com or by calling 1-800-882-4122, Ext. 7001.
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 45 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 more than 9 million megawatt hours of clean renewable electricity and create 10 billion pounds of steam that are sold to a variety of industries. For more information, visit www.covantaholding.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 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 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 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.
Contacts
Marisa F. Jacobs, Esq.
Vice President, Investor Relations and Corporate Communications
1-973-882-4196
Vera Carley
Director, Media Relations and Corporate Communications
1-973-882-2439