Morristown, New Jersey-based Covanta Holding Corp., a waste and energy solutions provider, reported financial results for the three and twelve months ended December 31, 2015.

According to the company, the twelve months ended Dec. 31, 2015, total revenue decreased by $37 million to $1.65 billion from $1.68 billion in 2014. Decreases in energy, recycled metals and construction revenue were partially offset by new waste and service revenue, the company says.

"We've taken several important steps forward since our last earnings call: we moved the Durham-York EfW project into commercial operations, made continued progress on a number of fronts in our strategic plan, and took advantage of the volatile market conditions to repurchase $50 million of stock," says Stephen J. Jones, Covanta's CEO. "Our Dublin facility is now more than halfway through construction and, operationally, our core EfW business is running very well. While we face continued weakness in the commodities markets, our long-term outlook for growing Free Cash Flow remains strong."

Same store North America energy from waste (EFW) revenue decreased by $47 million as follows:

• waste and service revenue increased by $13 million;
• energy revenue decreased by $25 million, primarily driven by lower energy pricing; and
• recycled metals revenue decreased by $35 million, driven by a decline in recycled metal market pricing.

Also within North America EfW revenue, contract transitions, including lower debt service revenue, resulted in a decrease of $14 million. Transactions, primarily related to the Pinellas EfW operating contract, increased revenue by $7 million.

All other revenue (non-EfW operations) increased by $16 million on a consolidated basis. Waste and service revenue from non-EfW operations increased by $80 million, primarily due to the start-up of the New York City municipal transfer station (MTS) contract and contribution from newly acquired environmental services businesses, while energy revenue from non-EfW operations decreased by $28 million, driven primarily by economically dispatching a biomass facility and lower market pricing. Other operating revenue decreased by $38 million, primarily due to lower construction revenue.

Excluding net write-offs, operating expense increased by $28 million to $1.5 billion. The year-over-year increase was primarily due to:

• a $41 million increase in North America EfW plant operating expense due primarily to additional expense of $31 million related to the adoption of the service concession arrangement accounting guidance, as well as an $8 million increase due to contract transitions and a $7 million increase due to transactions partially offset by a $6 million decrease in same store plant operating expense;
• a $33 million increase in North America segment non-EfW plant operating expense, primarily related to newly acquired Environmental Solutions businesses, the start-up of the New York City MTS contract and additional costs related to transfer stations, partially offset by lower incentive compensation and economically dispatching a biomass facility;
• a $28 million decrease in other operating expense incurred due to lower construction expense and the sale of our insurance business at the end of 2014; and
• a $17 million decrease related to depreciation and amortization expense and general and administrative expense.

Excluding net write-offs, operating income decreased by $65 million to $143 million in 2015 due to the revenue and expense items noted above.

Adjusted EBITDA declined by $46 million on a year-over-year basis to $428 million due to the decline in the commodities markets, start-up and construction expense associated with the Durham York facility and contract transitions, partially offset by a lower incentive accrual and the benefits from the ramp of the New York City MTS contract and Environmental Solutions acquisitions.

Free Cash Flow declined by $93 million to $147 million, primarily as a result of lower Adjusted EBITDA, higher maintenance capital expenditures, and net cash outflow for working capital.
Adjusted EPS decreased by $0.32 to $0.07. The decrease was driven primarily by lower operating income.
Shareholder Returns

In 2015, the company paid its cash dividend of $1.00 per share on annualized basis and repurchased $32 million of stock in the fourth quarter.

The company notes the following highlights and accomplishments over the last year:

• Completed 5 additional strategic acquisitions to expand Environmental Solutions business
• Commenced New York City MTS contract operations
• Established regional metals processing facility in Fairless Hills, Pennsylvania
• Durham-York moved into commercial operations in January 2016
• Dublin, Irelan, project construction more than 50 percent complete – on track for late 2017 operations
• Continuous Improvement initiatives underway utilizing Lean Six Sigma methodologies
• Repurchased $50 million of stock Q4 2015 through January 2016

The company also reported its fourth quarter results. For the three months ended December 31, 2015 compared to the same period last year:

• Total revenue decreased $3 million to $432 million;
• Adjusted EBITDA decreased $4 million to $127 million;
• Free Cash Flow increased $10 million to $64 million; and
• Adjusted EPS decreased by $0.03 to $0.03.

Covanta's modern EfW facilitiesconvert approximately 20 million tons of waste from municipalities and businesses into clean, renewable electricity to power one million homes and recycle approximately 500,000 tons of metal. Through a vast network of treatment and recycling facilities, Covanta also provides comprehensive industrial material management services to companies seeking solutions to some of today's most complex environmental challenges.