Oct. 21, 2009 (PR Newswire) -- FAIRFIELD, N.J., Oct. 21 /PRNewswire-FirstCall/ -- Covanta Holding Corporation (NYSE: CVA) ("Covanta") reported financial results today for the three months ended September 30, 2009. Diluted earnings per share were $0.26 in the third quarter of 2009. Excluding the transaction expense related to the acquisition of Veolia Energy-from-Waste facilities (the "Veolia acquisition"), diluted earnings per share were $0.28. This performance compares to $0.30 in the third quarter of 2008.
Third Quarter Results
"The base business continued to perform well in spite of the economic headwinds. A portion of the revenue decline was offset by lower costs. We were also pleased to have completed the acquisition of six of the seven Energy-from-Waste plants from Veolia in late August. Our new employees are very talented and we see clear efficiencies in the expanded operating platform. Taking into account our solid third quarter and the positive impact of the acquisition, we expect to report financial results near the midpoint of our guidance range for 2009," said Anthony Orlando, President and CEO of Covanta.
For the three months ended September 30, 2009, operating revenues were $409 million, a 7% decline from $439 million in the prior year comparable period.
Domestic segment revenue declined $9 million or 3% to $346 million. New business revenue was $23 million related primarily to the Veolia acquisition. Existing business revenues declined by $32 million, of which $20 million was largely due to the impact of the slow economy which caused lower recycled metal, energy and waste prices. In addition, lower debt service revenue, a decline in construction activity and contract changes at our Detroit, Kent and Indianapolis facilities contributed approximately $11 million to the decline.
Domestic operating expenses during the quarter increased by $6 million. New business plant operating expenses were $20 million and we also incurred acquisition-related transaction costs of $6 million, both of which were primarily associated with the Veolia acquisition. Expense reductions in the existing business provided a significant offset to the new business related expenses, resulting in only a modest net increase in our total domestic operating expenses. Reductions in existing business expenses are primarily attributable to a $4 million decline in energy related expenses and greater internalization of waste disposal, a $7 million decline in depreciation expense and $2 million in general and administrative cost savings. In addition, lower levels of construction activity and the contract changes at the Detroit, Kent and Indianapolis facilities contributed $10 million to the expense reduction.
International segment revenue decreased $22 million in the quarter while operating expenses declined by $23 million, resulting in operating income that was essentially flat with the prior year comparable period. The decreases in revenues and operating expenses resulted primarily from lower fuel costs at our Indian facilities.
Adjusted EBITDA was $153 million, down $15 million from last year's third quarter. This was primarily driven by the $20 million revenue reduction related largely to the slow economy offset by reduced expenses and new business.
Cash Flow provided by Operating Activities before the acquisition related costs ("Operating Cash Flow") was $111 million in the third quarter, up $2 million from last year's third quarter. The $15 million Adjusted EBITDA decline was offset by working capital changes as well as an $11 million tax refund.
Our balance sheet remains very strong, with $373 million of unrestricted cash and an undrawn $300 million revolving credit facility. In the quarter, we paid down $14 million of debt, bringing our net debt (total debt less cash and restricted funds set aside explicitly for project debt principal repayment) to $1.9 billion.
Year-to-Date Results
For the nine months ended September 30, 2009, total operating revenues were down 9% to $1.14 billion. Operating Cash Flow was $248 million for the year-to-date period compared to $271 million for the same period last year. Adjusted EBITDA was $375 million compared to $436 million for the same period last year.
2009 Guidance
Covanta is reaffirming its guidance for 2009 for the following key metrics:
-- Operating Cash Flow in the range of $325 million to $375 million;
-- Adjusted EBITDA of $500 million to $540 million; and
-- Diluted earnings per share of $0.65 to $0.80.
Conference Call Information
Covanta will host a conference call at 8:30 am (Eastern) on Thursday, October 22, 2009 to discuss its results for the three months ended September 30, 2009. To participate, please dial 866-318-8614 approximately 10 minutes prior to the scheduled start of the call. If you are calling from outside of the United States, please dial 617-399-5133. Please utilize pass code 56760074 when prompted by the conference call operator. 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) Thursday, October 22, 2009 through midnight (Eastern) Thursday, October 29, 2009. To access the replay, please dial 888-286-8010, or from outside of the United States 617-801-6888 and use the replay pass code 64332101. The webcast will also be archived on www.covantaholding.com and can be played or downloaded as an MP3 file.
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 44 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 domestic and international 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.
