Covanta sees waste volume increase in Q2

CEO Steven Jones predicts a solid finish for the year.

August 2, 2016
REW Staff
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http://http//investors.covanta.com/file.aspx?IID=103347&FID;=35224940Waste and energy solutions company Covanta Holding Corp., Morristown, New Jersey, has reported financial results for the three and six months ended June 30, 2016.

"We saw continued improvement in our waste pricing in the second quarter, driven by growth of profiled waste volumes and strong market dynamics in the Northeast," says Stephen J. Jones, Covanta president and CEO. "Construction at our Dublin EfW (energy-from-waste) facility is on track and we expect to have waste contracted for approximately 90 percent of facility capacity by the end of the year. The modest rebound we have seen in the commodity markets since the beginning of the year is encouraging and overall, we've positioned ourselves for a solid finish to the year, in line with our initial expectations."

For the three months ended June 30, 2016, total revenue increased by $10 million to $418 million from $408 million in 2Q 2015. An increase in waste and service revenue was partially offset by a decrease in energy revenue.

Same store North America EfW revenue decreased by $1 million as follows:

  • waste and service revenue increased by $4 million, primarily driven by price improvement;
  • energy revenue decreased by $4 million, primarily driven by lower market prices; and
  • recycled metals revenue decreased by $2 million, driven by lower market prices.

Also within North America EfW revenue, contract transitions resulted in an increase of $5 million due to additional energy revenue sharing.

All other revenue (non-EfW operations) increased by $3 million on a consolidated basis. Waste and service revenue from non-EfW operations increased by $16 million, primarily due to contribution from newly acquired environmental solutions businesses and the New York City MTS contract. Energy revenue from non-EfW operations decreased by $17 million, representing the contribution from biomass facilities and China in the prior year.

Excluding impairment charges, operating expense increased by $10 million to $409 million. The year-over-year increase was primarily because of:

  • a $9 million increase in North America EfW plant operating expense;
  • a $12 million increase in North America segment non-EfW plant operating expense, primarily related to operations in our newly acquired environmental solutions businesses, the New York City MTS contract, start-up of the centralized metals processing facility, and higher accruals for employee incentive compensation, partially offset by shutting down remaining biomass facilities;
  • a $7 million decrease in plant operating expense outside the North America segment due to the exchange in ownership interests in EfW facilities located in China; and
    an $8 million decrease in North America other operating expense primarily related to construction projects at Honolulu and Durham-York EfW facilities in the prior year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) declined by $1 million on a year-over-year basis to $82 million primarily because of lower prices for energy and metals and increased accrual for employee incentive compensation, partially offset by the contribution of newly acquired environmental solutions businesses and contract transitions.

Click here for the full earnings release.