Covanta, Morristown, New Jersey, a waste and energy solutions provider, released a report of its financial results for the three months ending March 31, 2016.
For the three months ended March 31, 2016, total revenue increased by $20 million, from $383 million in Q1 2015 to $403 million. An increase in waste and service revenue was partially offset by decreases in energy and recycled metals revenue.
Same store North America EfW revenue decreased by $5 million, as follows:
- waste and service revenue increased by $5 million, primarily driven by price improvement from increased volumes of profiled waste and contractual escalation
- energy revenue decreased by $3 million, primarily driven by lower market prices
- recycled metals revenue decreased by $7 million, driven by lower market prices
Also within North America EfW revenue, contract transitions resulted in an increase of $3 million.
All other revenue (non-EfW operations) increased by $22 million on a consolidated basis. Waste and service revenue from non-EfW operations increased by $31 million, primarily due to contribution from newly acquired environmental services businesses and a full quarter of the New York City MTS contract. Energy revenue from non-EfW operations decreased by $13 million, primarily driven by an $11 million decrease in biomass revenue as a result of economically dispatching facilities and lower market pricing. This caused two facilities owned by Covanta in Jonesboro and West Enfield, Maine, to close at the end of March.
Excluding impairment charges, operating expense increased by $26 million to $402 million. The year-over-year increase was primarily due to:
- an $11 million increase in North America EfW plant operating expense primarily due to the timing and scope of scheduled plant maintenance performed
- a $16 million increase in North America segment non-EfW plant operating expense, primarily related to newly acquired environmental services businesses, the New York City MTS contract, and the start-up of the Fairless Hills, Pennsylvania metals processing facility, partially offset by economically dispatching biomass facilities.
Excluding impairment charges, operating income decreased by $6 million to $1 million in Q1 2016 due to the revenue and expense items noted above.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) declined by $3 million on a year-over-year basis to $76 million primarily due to lower prices for energy and metals ($10 million total) and the timing of plant maintenance expenses, partially offset by the contribution of the New York City MTS contract and newly acquired environmental services businesses.
Free Cash Flow decreased by $21 million to $(5) million, primarily as a result of higher maintenance capital expenditures, higher cash interest and tax payments, and the factors that impacted Adjusted EBITDA as described above.
Adjusted EPS decreased by $0.06 to $(0.19). The decrease was driven primarily by lower operating income.
