Covanta Holding Corporation

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Covanta Holding Corporation Reports 2013 First Quarter Results

MORRISTOWN, NJ -- (Marketwired) -- 04/17/13 -- Covanta Holding Corporation (NYSE: CVA) ("Covanta" or the "Company"), a leading global owner and operator of Energy-from-Waste ("EfW") projects, reported financial results today for the three months ended March 31, 2013.


                                                 Three Months Ended
                                                      March 31,
                                         ----------------------------------
                                               2013              2012
                                         ----------------  ----------------
                                          (Unaudited, $ in millions, except
                                                 per share amounts)

Revenue                                  $            373  $            392
Net Loss                                 $            (26) $            (11)
Adjusted EBITDA                          $             58  $             74
Free Cash Flow                           $             25  $             77
Adjusted EPS                             $          (0.21) $          (0.09)

Q1 2013 Highlights:

  • Organic growth initiatives on track
  • Unfavorable impact of increased maintenance activity
  • Raised cash dividend by 10% to $0.165 per share ($0.66 per share annually)
  • Increased buyback authorization to $150 million
  • Reaffirming FY2013 guidance

Commenting on Covanta's results, Anthony Orlando, President and Chief Executive Officer stated, "Our organic growth initiatives are on track, we're seeing the benefit of improving energy markets and our business model remains very stable. As such, I'm confident that we'll finish the year within our guidance range." Orlando continued, "We typically conduct a large portion of our scheduled plant maintenance during the first quarter but this year the percentage of our planned work was even higher than last year. Furthermore, we had to make some unplanned repairs which caused additional downtime. The timing of planned maintenance will reverse in the second half and we're working to offset the impact of the unplanned downtime."

Q1 2013 Results
Operating revenues declined $19 million, or 5%, to $373 million, compared to the prior year. This decline was primarily due to lower construction revenue and downtime due to increased maintenance activity, partially offset by the benefits from higher energy prices and from organic growth initiatives.

Operating expenses decreased by $11 million to $378 million. The improvement was primarily due to lower construction expense, a gain related to the elimination of the defined benefit pension obligation, and the benefits from organic growth initiatives, partially offset by increased plant maintenance expense primarily due to timing.

Operating loss was $5 million, compared to operating income of $3 million in the prior year. This decrease was primarily due to increased maintenance activity including timing noted above, partially offset by a gain related to the elimination of the defined benefit pension plan obligation.

Adjusted EBITDA decreased by $16 million to $58 million, due to increased maintenance activity including the associated revenue reduction. Approximately $9 million of the decrease was due to unplanned maintenance and the remainder was primarily due to timing of planned maintenance which is expected to reverse by the end of the year.

Free Cash Flow decreased by $52 million to $25 million for the three month comparative period. The decline was primarily driven by the timing of construction working capital and the decline in Adjusted EBITDA.

Adjusted EPS declined by $0.12 to $(0.21) versus $(0.09) in the prior year period, primarily due to lower operating income and higher interest expense as a result of the refinancings completed in 2012.

Shareholder Returns and Liquidity
During the first quarter, the Company increased its quarterly cash dividend by 10% to $0.165 per share ($0.66 per share on an annual basis) and returned $46 million to shareholders, consisting of $22 million in cash dividends declared and $24 million in share repurchases (0.9% of common stock outstanding). Since the inception of its buyback program the Company has repurchased 27.0 million shares, or 17.5% of shares outstanding, at a weighted average cost of $16.15 per share. As of March 31, 2013, Covanta had $126 million of share repurchase authorization remaining.

The Company amended its $297 million senior secured term loan B in the first quarter to reduce its interest rate by 0.50% at current rates, consisting of a reduction in the LIBOR margin from 3.00% to 2.75% and a reduction in the LIBOR floor from 1.00% to 0.75%.

Sanjiv Khattri, Covanta's Executive Vice-President and Chief Financial Officer, commented, "While we remain focused on allocating capital to generate value-enhancing growth, we again demonstrated our commitment to returning excess capital to shareholders with our actions during the quarter. In addition, we were pleased with two small transactions: the repricing of our term loan which will reduce our ongoing interest cost and the elimination of our pension obligation."

2013 Full Year Guidance
The Company is reaffirming its guidance for 2013 for the following key metrics:

(In millions, except per share amounts)
----------------------------------------------------------------------------
                       FY2012         FY2013
Metric                 Actual     Guidance Range      % Change At Midpoint
----------------------------------------------------------------------------
Adjusted EBITDA         $ 492      $ 500 - $ 530               5%
----------------------------------------------------------------------------
Free Cash Flow          $ 262      $ 250 - $ 280               1%
----------------------------------------------------------------------------
Adjusted EPS           $ 0.52     $ 0.40 - $ 0.50            (13)%
----------------------------------------------------------------------------

Conference Call Information
Covanta will host a conference call at 8:30 am (Eastern) on Thursday, April 18, 2013 to discuss its first quarter results. The conference call will begin with prepared remarks, which will be followed by a question and answer session. To participate, please dial 800-860-2442 approximately 10 minutes prior to the scheduled start of the call. If calling from Canada, please dial 866-605-3852. If calling outside of the United States and Canada, please dial 412-858-4600. Please request the "Covanta Holding Corporation call" when prompted by the conference call operator. The conference call will also be webcast live from the Investor Relations section of the Company's website. A presentation will be made available during the call and will be found on the Investor Relations section of the Covanta website at www.covantaenergy.com.

A replay will be available one hour after the end of the conference call through 9:00 AM (Eastern) Friday, April 26, 2013. To access the replay, please dial 877-344-7529, or from outside of the United States 412-317-0088 and use the replay conference ID number 10027173. The webcast will also be archived on www.covantaenergy.com.

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 9 million megawatt hours of clean renewable electricity and approximately 9 billion pounds of steam that are sold to a variety of industries. For more information, visit www.covantaenergy.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 Holding Corporation and its subsidiaries ("Covanta") or industry results, 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. For additional information see the Cautionary Note Regarding Forward-Looking Statements at the end of the Exhibits.



                                                                  Exhibit 1
Covanta Holding Corporation
Condensed Consolidated Statements of Operations

                                                     Three Months Ended
                                                          March 31,
                                                 --------------------------
                                                     2013          2012
                                                 ------------  ------------
                                                         (Unaudited)
                                                  (In millions, except per
                                                       share amounts)
Operating revenues
  Waste and service revenues                     $        231  $        238
  Recycled metals revenues                                 16            20
  Electricity and steam sales                             102            91
  Other operating revenues                                 24            43
                                                 ------------  ------------
    Total operating revenues                              373           392
                                                 ------------  ------------
Operating expenses
  Plant operating expenses                                281           267
  Other operating expenses                                 17            39
  General and administrative expenses                      24            25
  Depreciation and amortization expense                    53            50
  Net interest expense on project debt                      3             8
                                                 ------------  ------------
    Total operating expenses                              378           389
                                                 ------------  ------------
Operating (loss) income                                    (5)            3
                                                 ------------  ------------
Other income (expense)
  Interest expense                                        (29)          (18)
  Non-cash convertible debt related expense                (7)           (6)
  Loss on extinguishment of debt                           (1)           (2)
  Other income, net                                         -             3
                                                 ------------  ------------
    Total other expenses                                  (37)          (23)
                                                 ------------  ------------
Loss before income tax benefit and equity in net
 income from unconsolidated investments                   (42)          (20)
Income tax benefit                                         17             8
Equity in net (loss) income from unconsolidated
 investments                                               (1)            1
                                                 ------------  ------------
Net Loss                                                  (26)          (11)
                                                 ------------  ------------
Less: Net loss (income) attributable to
 noncontrolling interests in subsidiaries                   1            (1)
                                                 ------------  ------------
Net Loss Attributable to Covanta Holding
 Corporation                                     $        (25) $        (12)
                                                 ============  ============

Weighted Average Common Shares Outstanding:
Basic                                                     130           134
                                                 ============  ============
Diluted                                                   130           134
                                                 ============  ============

Loss Per Share:
Basic                                            $      (0.19) $      (0.09)
                                                 ============  ============
Diluted                                          $      (0.19) $      (0.09)
                                                 ============  ============

Cash Dividend Declared Per Share:                $      0.165  $       0.15
                                                 ============  ============

Supplemental Information - Non-GAAP
  Adjusted EPS (a)                               $      (0.21) $      (0.09)

(a) For additional information, see Exhibit 4 of this Press Release.



                                                                 Exhibit 1A
Covanta Holding Corporation
Condensed Consolidated Statements of Comprehensive Loss

                                                     Three Months Ended
                                                          March 31,
                                                 --------------------------
                                                     2013          2012
                                                 ------------  ------------
                                                  (Unaudited, in millions)
Net loss                                         $        (26) $        (11)
                                                 ------------  ------------
  Foreign currency translation                             (5)            1
  Adjustment for defined benefit pension plan
   settlement, net of tax benefit of $2 (a)                (4)            -
  Pension and postretirement plan unrecognized
   benefits, net of tax expense of $1                       3             -
  Net unrealized (loss) gain on derivative
   instruments, net of tax benefit of $1 and tax
   expense of $0, respectively                             (2)            1
  Net unrealized gain on available for sale
   securities, net of tax expense of $0                     1             -
                                                 ------------  ------------
Other comprehensive (loss) income attributable
 to Covanta Holding Corporation                            (7)            2
                                                 ------------  ------------
Comprehensive loss                                        (33)           (9)
                                                 ------------  ------------
Less:
  Net loss (income) attributable to
   noncontrolling interests in subsidiaries                 1            (1)
                                                 ------------  ------------
Comprehensive loss (income) attributable to
 noncontrolling interests in subsidiaries                   1            (1)
                                                 ------------  ------------
Comprehensive loss attributable to Covanta
 Holding Corporation                             $        (32) $        (10)
                                                 ============  ============
(a) For additional information, see Exhibit 4A - Note (a) of this Press
    Release.



                                                                  Exhibit 2
Covanta Holding Corporation
Condensed Consolidated Balance Sheets

                                                            As of
                                                 --------------------------
                                                   March 31,   December 31,
                                                     2013          2012
                                                 ------------  ------------
                                                  (Unaudited)
                                                  (In millions, except per
                                                       share amounts)
                     ASSETS
Current:
  Cash and cash equivalents                      $        211  $        246
  Restricted funds held in trust                           53            53
  Receivables (less allowances of $7 and $6,
   respectively)                                          262           256
  Unbilled service receivables                             13            18
  Deferred income taxes                                    35            18
  Prepaid expenses and other current assets               114            97
                                                 ------------  ------------
Total Current Assets                                      688           688
  Property, plant and equipment, net                    2,575         2,561
  Investments in fixed maturities at market
   (cost: $35 and $36, respectively)                       36            36
  Restricted funds held in trust                          155           161
  Unbilled service receivables                             15            17
  Waste, service and energy contracts, net                389           399
  Other intangible assets, net                             23            23
  Goodwill                                                249           249
  Investments in investees and joint ventures              46            49
  Other assets                                            376           343
                                                 ------------  ------------
Total Assets                                     $      4,552  $      4,526
                                                 ============  ============
             LIABILITIES AND EQUITY
Current:
  Current portion of long-term debt              $          3  $          3
  Current portion of project debt                          72            80
  Accounts payable                                         55            41
  Deferred revenue                                         23            31
  Accrued expenses and other current liabilities          245           205
                                                 ------------  ------------
Total Current Liabilities                                 398           360
  Long-term debt                                        2,101         2,012
  Project debt                                            229           237
  Deferred income taxes                                   694           691
  Waste and service contracts                              33            35
  Other liabilities                                       135           136
                                                 ------------  ------------
Total Liabilities                                       3,590         3,471
                                                 ------------  ------------
Equity:
Covanta Holding Corporation stockholders'
 equity:
  Preferred stock ($0.10 par value; authorized
   10 shares; none issued and outstanding)                  -             -
  Common stock ($0.10 par value; authorized 250
   shares; issued 159 and 159 shares,
   respectively; outstanding 131 and 132 shares,
   respectively)                                           16            16
  Additional paid-in capital                              786           806
  Accumulated other comprehensive income                    -             7
  Accumulated earnings                                    159           222
  Treasury stock, at par                                   (3)           (3)
                                                 ------------  ------------
    Total Covanta Holding Corporation
     stockholders equity                                  958         1,048
  Noncontrolling interests in subsidiaries                  4             7
                                                 ------------  ------------
Total Equity                                              962         1,055
                                                 ------------  ------------
Total Liabilities and Equity                     $      4,552  $      4,526
                                                 ============  ============



                                                                  Exhibit 3
Covanta Holding Corporation
Condensed Consolidated Statements of Cash Flow

                                                     Three Months Ended
                                                          March 31,
                                                 --------------------------
                                                     2013          2012
                                                 ------------  ------------
                                                  (Unaudited, in millions)
OPERATING ACTIVITIES:
Net loss                                         $        (26) $        (11)
Adjustments to reconcile net loss to net cash
 provided by operating activities:
    Depreciation and amortization expense                  53            50
    Defined benefit pension plan settlement gain
     (a)                                                   (6)            -
    Loss on extinguishment of debt                          1             2
    Non-cash convertible debt related expense               7             6
    Stock-based compensation expense                        5             5
    Deferred income taxes                                 (12)           (7)
    Other, net                                             (2)           (6)
    Change in restricted funds held in trust                9             2
    Change in working capital                              33            63
                                                 ------------  ------------
Net cash provided by operating activities                  62           104
                                                 ------------  ------------
INVESTING ACTIVITIES:
    Purchase of property, plant and equipment             (63)          (32)
    Acquisition of noncontrolling interest in
     subsidiary                                           (14)            -
    Acquisition of land use rights                          -            (1)
    Other, net                                            (10)            1
                                                 ------------  ------------
Net cash used in investing activities                     (87)          (32)
                                                 ------------  ------------
FINANCING ACTIVITIES:
    Proceeds from borrowings on long-term debt              -           699
    Payment of deferred financing costs                    (1)          (23)
    Principal payments on long-term debt                   (1)         (619)
    Principal payments on project debt                    (16)          (37)
    Convertible debenture repurchases                       -           (25)
    Payments of borrowings on revolving credit
     facility                                             (51)            -
    Proceeds from borrowings on revolving credit
     facility                                              98             -
    Change in restricted funds held in trust               (3)           12
    Cash dividends paid to stockholders                     -           (10)
    Common stock repurchased                              (24)          (30)
    Financing of insurance premiums, net                    -            (3)
    Other, net                                            (12)           (1)
                                                 ------------  ------------
Net cash used in financing activities                     (10)          (37)
                                                 ------------  ------------
Effect of exchange rate changes on cash and cash
 equivalents                                                -             -
                                                 ------------  ------------
Net (decrease) increase in cash and cash
 equivalents                                              (35)           35
Cash and cash equivalents at beginning of period          246           234
                                                 ------------  ------------
Cash and cash equivalents at end of period                211           269
Less: Cash and cash equivalents of discontinued
 operations at end of period                                -             2
                                                 ------------  ------------
Cash and cash equivalents of continuing
 operations at end of period                     $        211  $        267
                                                 ============  ============

(a) For additional information, see Exhibit 4A - Note (a) of this Press
    Release.



                                                                   Exhibit 4
Covanta Holding Corporation
Reconciliation of Diluted Loss Per Share to Adjusted EPS

                                        Three Months Ended
                                             March 31,
                                       --------------------
                                                                Full Year
                                          2013       2012    Estimated 2013
                                       ---------  ---------  ---------------
                                            (Unaudited)
Diluted Loss Per Share                 $   (0.19) $   (0.09)  $0.42 - $0.52
Reconciling Items (a)                      (0.02)         -       (0.02)
                                       ---------  ---------  ---------------
Adjusted EPS                           $   (0.21) $   (0.09)  $0.40 - $0.50
                                       =========  =========  ===============

(a) For details related to the Reconciling Items, see Exhibit 4A of this
    Press Release.



                                                                  Exhibit 4A
Covanta Holding Corporation
Reconciling Items

                                        Three Months Ended
                                             March 31,
                                       --------------------
                                          2013       2012
                                       ---------  ---------
                                            (Unaudited)
                                       (In millions, except
                                        per share amounts)
Reconciling Items
Operating loss related to insurance
 subsidiaries                          $       -  $       1
Defined benefit pension plan
 settlement gain (a)                          (6)         -
Loss on extinguishment of debt                 1          2
Effect of foreign exchange gain on
 indebtedness                                  -         (3)
Other                                          1          -
                                       ---------  ---------
  Total Reconciling Items, pre-tax            (4)         -
Pro forma income tax impact                    2          -
                                       ---------  ---------
  Total Reconciling Items, net of tax  $      (2) $       -
                                       =========  =========
Diluted Loss Per Share Impact          $   (0.02) $       -
                                       =========  =========
Weighted Average Diluted Shares
 Outstanding                                 130        134
                                       =========  =========

(a) During the three months ended March 31, 2013, we recorded a defined
    benefit pension plan settlement gain of $6 million.


                                                                  Exhibit 4B
Covanta Holding Corporation
Effective Tax Rate ("ETR")

                                         Three Months Ended
                                             March 31,
                                       ---------------------
                                          2013       2012
                                       ---------- ----------
                                            (Unaudited)
Effective Tax Rate (a)                   (40.4)%    (38.0)%

(a) The increase in the effective tax rate was primarily a result of an
    increase in taxes on foreign operations and development activities, and
    an increase in state taxes related to the mix of earnings and losses
    from subsidiaries that are subject to state taxes on a separate entity
    basis. We currently estimate our annual effective tax rate for the year
    ending December 31, 2013 to be approximately 45.6%. We review the annual
    effective tax rate on a quarterly basis as projections are revised and
    laws are enacted.



                                                                   Exhibit 5
Covanta Holding Corporation
Reconciliation of Net Loss to Adjusted EBITDA

                                        Three Months Ended
                                             March 31,
                                       --------------------
                                                                Full Year
                                          2013       2012     Estimated 2013
                                       ---------  ---------  ---------------
                                          (Unaudited, in
                                             millions)
Net Loss Attributable to Covanta
 Holding Corporation                   $     (25) $     (12)    $53 - $66

Operating loss related to insurance
 subsidiaries                                  -          1      (5) - 0

Depreciation and amortization expense         53         50     220 - 210

Debt service:
  Net interest expense on project debt         3          8
  Interest expense                            29         18
  Non-cash convertible debt related
   expense                                     7          6
                                       ---------  ---------
Subtotal debt service                         39         32     171 - 155

Income tax benefit                           (17)        (8)     40 - 65

Defined benefit pension plan
 settlement gain (a)                          (6)         -

Loss on extinguishment of debt                 1          2

Net (loss) income attributable to
 noncontrolling interests in
 subsidiaries                                 (1)         1       3 - 8

Other adjustments:
  Debt service billings in excess of
   revenue recognized                          7          6
  Non-cash compensation expense                5          5
  Other non-cash items (b)                     2         (3)
                                       ---------  ---------
Subtotal other adjustments                    14          8      18 - 26
                                       ---------  ---------

Total adjustments                             83         86
                                       ---------  ---------  ---------------
Adjusted EBITDA                        $      58  $      74    $500 - $530
                                       =========  =========  ===============

(a) For additional information, see Exhibit 4A - Note (a) of this Press
    Release.
(b) Includes certain non-cash items that are added back under the definition
    of Adjusted EBITDA in Covanta Energy Corporation's credit agreement.



                                                                   Exhibit 6
Covanta Holding Corporation
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash
Flow

                                        Three Months Ended
                                             March 31,
                                       --------------------
                                                                Full Year
                                          2013       2012    Estimated 2013
                                       ---------  ---------  ---------------
                                          (Unaudited, in
                                             millions)
Cash flow provided by operating
 activities                            $      62  $     104    $325 - $360
Plus: Cash flow used in operating
 activities from insurance
 subsidiaries                                  1          1       5 - 10
Less: Maintenance capital expenditures
 (a)                                         (38)       (28)   (80) - (90)
                                       ---------  ---------  ---------------
Free Cash Flow                         $      25  $      77    $250 - $280
                                       =========  =========  ===============

Weighted Average Diluted Shares
 Outstanding                                 130        134

Uses of Free Cash Flow
Investments:
  Acquisition of noncontrolling
   interest in subsidiary              $     (14) $       -
  Non-maintenance capital expenditures
   (b)                                       (25)        (4)
  Acquisition of land use rights (b)           -         (1)
  Other growth investments (b)                 -          1
  Other investing activities, net (c)        (10)         -
                                       ---------  ---------
Total investments                      $     (49) $      (4)
                                       ---------  ---------

Return of capital to stockholders:
  Cash dividends paid to stockholders  $       -  $     (10)
  Common stock repurchased                   (24)       (30)
                                       ---------  ---------
Total return of capital to
 stockholders                          $     (24) $     (40)
                                       ---------  ---------

Capital raising activities:
  Net proceeds from issuance of
   corporate debt (d)                  $       -  $     676
  Other financing activities, net            (13)        (1)
                                       ---------  ---------
Net proceeds from capital raising
 activities                            $     (13) $     675
                                       ---------  ---------

Debt repayments:
  Net cash used for scheduled
   principal payments on corporate
   debt                                $      (1) $     (23)
  Net cash used for scheduled
   principal payments on project debt
   (e)                                       (19)       (25)
  Optional repayment of corporate debt
   (f)                                         -       (621)
                                       ---------  ---------
Total debt repayments                  $     (20) $    (669)
                                       ---------  ---------

Borrowing activities - Revolving
 credit facility, net                  $      47  $       -

Short-term borrowing activities -
 Financing of insurance premiums, net  $       -  $      (3)
                                       ---------  ---------

Net change in cash and cash
 equivalents                           $     (34) $      36
                                       =========  =========

(a) Purchases of property, plant and equipment are also referred to as
    capital expenditures. Capital expenditures that primarily maintain
    existing facilities are classified as maintenance capital expenditures.
    The following table provides the components of total purchases of
    property, plant and equipment:



                                        Three Months Ended
                                             March 31
                                       --------------------
                                          2013       2012
                                       ---------  ---------

Maintenance capital expenditures       $     (38) $     (28)
Capital expenditures associated with
 organic growth initiatives and
 technology development                      (25)        (4)
                                       ---------  ---------
Total purchases of property, plant and
 equipment                             $     (63) $     (32)
                                       =========  =========

(b) Investments in growth opportunities, including organic growth
    initiatives, technology, business development, and other similar
    expenditures, excluding acquisitions of businesses.

(c) Other investing activities is primarily comprised of net payments from
    the purchase/sale of investment securities and business development
    expenses.

(d) Excludes borrowings under Revolving Credit Facility. Calculated as
    follows:

Proceeds from borrowings on long-term
 debt                                  $       -  $     699
Less: Financing costs related to
 issuance of long-term debt                    -        (23)
                                       ---------  ---------
Net proceeds from issuance of
 corporate debt                        $       -  $     676
                                       =========  =========

(e) Calculated as follows:

Total scheduled principal payments on
 project debt                          $     (16) $     (37)
(Increase) decrease in related
 restricted funds held in trust               (3)        12
                                       ---------  ---------
Net cash used for principal payments
 on project debt                       $     (19) $     (25)
                                       =========  =========

(f) Calculated as follows:

Redemption of Term Loan due 2014       $       -  $    (619)
Redemption of Convertible Debentures           -         (2)
                                       ---------  ---------
Total optional repayment of corporate
 debt                                  $       -  $    (621)
                                       =========  =========



                                                                   Exhibit 7
Covanta Holding Corporation
Capitalization Information

                                                            As of
                                                 ---------------------------
                                                   March 31,    December 31,
                                                      2013          2012
                                                 ------------- -------------
                                                   (Unaudited, in millions)
Cash and Cash Equivalents:
Domestic                                         $          11 $          12
International                                              193           215
Insurance Subsidiary                                         7            19
                                                 ------------- -------------
Total Cash and Cash Equivalents                  $         211 $         246
                                                 ============= =============

Restricted Funds Held in Trust: (a)
  Debt Service Funds - Principal                 $          74 $          72
  Debt Service Funds - Interest                              6             6
                                                 ------------- -------------
Debt Service Funds - Total                                  80            78
Revenue Funds                                                6             9
Other Funds                                                122           127
                                                 ------------- -------------
Total Restricted Funds Held in Trust             $         208 $         214
                                                 ============= =============

(a) Restricted funds held in trust are primarily amounts received by third-
    party trustees relating to certain projects we own which may be used
    only for specified purposes. We generally do not control these accounts.
    They primarily include debt service reserves for payment of principal
    and interest on project debt. Revenue funds are comprised of deposits of
    revenues received with respect to projects prior to their disbursement.
    Other funds are primarily amounts held in trust for operations,
    maintenance, environmental obligations, operating lease reserves in
    accordance with agreements with our clients and amounts held for future
    scheduled distributions.



                                                                  Exhibit 7A

                                         As of                 As of
                                     March 31, 2013      December 31, 2012
                                 --------------------- ---------------------
                                    Face       Book       Face       Book
                                    Value      Value      Value      Value
                                 ---------- ---------- ---------- ----------
                                           (Unaudited, in millions)
Corporate Debt:
Revolving Credit Facility        $      107 $      107 $       60 $       60
Term Loan due 2019                      297        296        298        297
7.25% Senior Notes due 2020             400        400        400        400
6.375% Senior Notes due 2022            400        400        400        400
3.25% Cash Convertible Senior
 Notes due 2014                         460        566        460        523
                                 ---------- ---------- ---------- ----------
Sub-total                        $    1,664 $    1,769 $    1,618 $    1,680
                                 ---------- ---------- ---------- ----------
Tax-Exempt Bonds
  4.875% Massachusetts Series
   2012A due 2027                $       20 $       20 $       20 $       20
  4.875% Massachusetts Series
   2012B due 2042                        67         67         67         67
  5.25% Massachusetts Series
   2012C due 2042                        83         83         83         83
  5.25% Niagara Series 2012A due
   2042                                 130        130        130        130
  4.00% Niagara Series 2012B due
   2024                                  35         35         35         35
                                 ---------- ---------- ---------- ----------
Sub-total Tax-Exempt Bonds       $      335 $      335 $      335 $      335
                                 ---------- ---------- ---------- ----------
Total corporate debt (including
 current portion)                $    1,999 $    2,104 $    1,953 $    2,015
                                 ---------- ---------- ---------- ----------

Project Debt:
Domestic project debt - service
 fee facilities                  $      207 $      209 $      223 $      226
Domestic project debt - tip fee
 facilities                              69         69         68         68
International project debt               23         23         23         23
                                 ---------- ---------- ---------- ----------
Total project debt (including
 current portion)                $      299 $      301 $      314 $      317
                                 ---------- ---------- ---------- ----------

Total Debt Outstanding           $    2,298 $    2,405 $    2,267 $    2,332
                                 ========== ========== ========== ==========

Net Debt (a)                     $    2,013            $    1,949
                                 ==========            ==========

Availability for Borrowings
 under the Revolving Credit
 Facility                        $      536            $      584
                                 ==========            ==========

(a) Net Debt is calculated as total principal amount of debt outstanding
    less cash and cash equivalents and debt service principal restricted
    funds.



                                                                   Exhibit 8
Covanta Holding Corporation
Return to Stockholders
(Unaudited, in millions, except per share amounts and percentages)

During years ended December 31, 2010, 2011, 2012 and the three months ended
March 31, 2013, the following amounts were returned to stockholders:

                                                      Weighted   % of Common
                                                       Average      Stock
                                            Shares    Cost Per   Outstanding
                                 Amount  Repurchased    Share    Repurchased
                                -------- ----------- ---------- ------------
Common Stock Repurchased (a)
FY 2010                         $     95         6.1 $    15.56     3.9%
FY 2011                         $    230        14.4 $    15.99     9.6%
FY 2012                         $     88         5.3 $    16.55     3.9%
Q1 2013                         $     24         1.2 $    19.27     0.9%
                                -------- -----------
Total Common Stock Repurchased  $    437        27.0 $    16.15     17.5%
                                -------- -----------

Cash Dividends Declared to
 Stockholders
FY 2010                         $    233
FY 2011                         $     42
FY 2012                         $     81
Q1 2013 (b)                     $     22
                                --------
Total Cash Dividends Declared
 to Stockholders                $    378
                                --------

                                --------
Total Return to Stockholders    $    815
                                ========

(a) We increased the authorization to repurchase shares of outstanding
    common stock to $150 million during the three months ended March 31,
    2013. As of March 31, 2013, the amount remaining under our currently
    authorized share repurchase program was $126 million.

(b) On March 7, 2013, we authorized a quarterly cash dividend of $0.165 per
    share. The Q1 2013 payment was made on April 5, 2013 to stockholders of
    record as of the close of business on March 28, 2013.



                                                                   Exhibit 9
Covanta Holding Corporation
Consolidated Reconciliation of Cash Flow Provided by Operating Activities to
 Adjusted EBITDA

                                        Three Months Ended
                                             March 31,
                                       --------------------
                                                                Full Year
                                          2013       2012     Estimated 2013
                                       ---------  ---------  ---------------
                                          (Unaudited, in
                                             millions)
Cash flow provided by operating
 activities                            $      62  $     104    $325 - $360

Cash flow used in operating activities
 from insurance subsidiaries                   1          1       5 - 10

Debt service                                  39         32     171 - 155

Change in working capital                    (33)       (63)
Change in restricted funds held in
 trust                                        (9)        (2)
Non-cash convertible debt related
 expense                                      (7)        (6)
Equity in net income from
 unconsolidated investments                   (1)         1
Dividends from unconsolidated
 investments                                  (1)         -
Current tax provision                         (5)        (1)
Other                                         12          8
                                       ---------  ---------  ---------------
  Sub-total                                  (44)       (63)     (1) - 5
                                       ---------  ---------  ---------------
Adjusted EBITDA                        $      58  $      74    $500 - $530
                                       =========  =========  ===============



                                                                  Exhibit 10
Covanta Holding Corporation
Plant Operating Expenses Detail - Americas

The Americas segment quarterly plant operating expenses typically differs
substantially as a result of the timing of scheduled plant maintenance. We
typically conduct scheduled maintenance periodically each year, which
requires that individual boiler units temporarily cease operations. During
these scheduled maintenance periods, we incur material repair and
maintenance expenses and receive less revenue until the boiler and/or
turbine units resume operations. This scheduled maintenance typically occurs
during periods of off-peak electric demand and/or lower waste volumes, which
are our first, second and fourth fiscal quarters. The first half of the year
scheduled maintenance period is typically the most extensive. The third
quarter scheduled maintenance period is typically the least extensive. Given
these factors, we typically experience our lowest operating income from our
projects during the first half of each year. The aggregate of all other
components of plant operating expense is relatively consistent each quarter
of the year.

                                                      Three Months Ended
                                                          March 31,
                                                 ---------------------------
                                                      2013          2012
                                                 ------------- -------------
                                                   (Unaudited, in millions)
Plant Operating Expenses:
Plant maintenance (a)                            $          88 $          81
All other                                                  184           179
                                                 ------------- -------------
Plant operating expenses                         $         272 $         260
                                                 ============= =============

(a) Plant maintenance costs include our internal maintenance team and non-
    facility employee costs for facility scheduled and unscheduled
    maintenance and repair expenses.



                                                                Exhibit 11A
Covanta Holding Corporation - Americas Segment
Statistics - (Unaudited, in millions, except percentages)

Boiler Availability

                                                     Last Twelve Months
                                                       as of March 31,
                                                 --------------------------
                                                     2013          2012
                                                 ------------  ------------
EfW Facilities                                       92.5%         91.9%

Waste and Service Revenue

                                                     Three Months Ended
                                                          March 31,
                                                 --------------------------
                                                     2013          2012
                                                 ------------  ------------
Waste and service revenue unrelated to project
 debt                                            $        220  $        225
Revenue earned explicitly to service project
 debt - principal                                           8            10
Revenue earned explicitly to service project
 debt - interest                                            1             2
                                                 ------------  ------------
Total waste and service revenue                  $        229  $        237
                                                 ============  ============


Energy Revenue and Megawatt Hours (MWh) At Market and Contracted by Facility
 Type

                                    Three Months Ended March 31,
                       -----------------------------------------------------
                                  2013                       2012
                       -------------------------- --------------------------
                                           % of                       % of
                        Revenue  Volume    Total   Revenue  Volume    Total
                          (a)   (a), (b)  Volume     (a)   (a), (b)  Volume
                       -------- -------- -------- -------- -------- --------
EfW
  At Market            $      7     0.17    12%   $     16     0.31    23%
  Contracted & Hedged        74     1.05    74%         57     0.85    63%
                       -------- -------- -------- -------- -------- --------
Total EfW              $     81     1.22    86%   $     73     1.16    86%
Biomass
  At Market            $      7     0.11    8%    $      3     0.11    8%
  Contracted                  7     0.09    6%           8     0.08    6%
                       -------- -------- -------- -------- -------- --------
Total Biomass          $     14     0.20    14%   $     11     0.19    14%
                       -------- -------- -------- -------- -------- --------
Total                  $     95     1.42   100%   $     84     1.35   100%
                       ======== ======== ======== ======== ======== ========

(a) Covanta share only
(b) Steam sales converted to MWh equivalents (0.2M MWh for both 2013 and
    2012)


Projected Energy Megawatt Hours (MWh) At Market and Contracted by Facility
Type (a)

                         Full Year
                           2013E
                        As of April
                          1, 2013
                       -------------
EfW
  At Market                      0.9
  Contracted & Hedged            4.5
                       -------------
Total EfW                        5.4
Biomass (b)
  At Market                      0.4
  Contracted                     0.4
                       -------------
Total Biomass                    0.8
                       -------------
Total                            6.2
                       =============

(a) Covanta share only
(b) Additional 0.3 million MWh of Biomass energy is economically dispatched,
    but available to run



                                                                 Exhibit 11B
Covanta Holding Corporation - Americas Segment
Statistics - (Unaudited, in millions, except percentages, metal tons (in
 thousands), and pricing data in Economic Drivers Section)


Recycled Metal Net Revenue by Type (a)
                                                      Last Twelve Months
                                                       as of March 31,
                                                 ---------------------------
                                                      2013          2012
                                                 ------------- -------------
Ferrous Metal                                    $          55 $          63
Non-Ferrous Metal                                           13            14
                                                 ------------- -------------
Total                                            $          68 $          77
                                                 ============= =============

(a) Covanta share only


Recycled Metal Net Tons Recovered by Type (a),(b)

                                                      Last Twelve Months
                                                       as of March 31,
                                                 ---------------------------
                                                      2013          2012
                                                 ------------- -------------
Ferrous Metal                                            300.0         319.3
Non-Ferrous Metal                                         14.8          14.5
                                                 ------------- -------------
Total                                                    314.8         333.8
                                                 ============= =============

(a) Net volume: Covanta share only
(b) Tons in thousands


Published Industry U.S. Economic Drivers (a)
                                                       As of March 31,
                                                 --------------------------
                                                     2013          2012
                                                 ------------  ------------
Consumer Price Index (b)                                  1.5%          2.7%
PJM Pricing (Electricity) (c)                    $      44.82  $      31.93
Henry Hub Pricing (Natural Gas) (d)              $       3.49  $       2.46
#1 HMS Pricing (Ferrous Metals) (e)              $        350  $        411
Scrap Metals - Old Sheet & Old Cast (f)          $       0.74  $       0.74

(a) While these drivers impact our business, there is not an exact
    correlation between our results and changes in these metrics.
(b) Represents the year-over-year percent change in the Headline CPI number.
    The Consumer Price Index (CPI-U) data is provided by the U.S. Department
    of Labor Bureau of Labor Statistics.
(c) Average price per MWh for Q1 2013 and Q1 2012. Pricing for the PJM PSEG
    Zone is provided by the PJM ISO.
(d) Average price per MMBtu for Q1 2013 and Q1 2012. The Henry Hub Pricing
    data is provided by the Natural Gas Weekly Update, Energy Information
    Administration, Washington, DC. Nebraska Energy Office, Lincoln, NE.
(e) Average price per gross ton for Q1 2013 and Q1 2012. The #1 Heavy Melt
    Steel (HMS) composite index ($/gross ton) price is published by American
    Metal Market.
(f) Average price per pound for Q1 2013 and Q1 2012. Calculated using high
    and low prices for Old Sheet & Old Cast Scrap Metals ($/lb) published by
    American Metal Market.

Discussion of Non-GAAP Financial Measures

We use a number of different financial measures, both United States generally accepted accounting principles ("GAAP") and non-GAAP, in assessing the overall performance of our business. To supplement our assessment of results prepared in accordance with GAAP, we use the measures of Adjusted EBITDA, Free Cash Flow, and Adjusted EPS, which are non-GAAP measures as defined by the Securities and Exchange Commission. The non-GAAP financial measures of Adjusted EBITDA, Free Cash Flow, and Adjusted EPS as described below, and used in the tables above, are not intended as a substitute or as an alternative to net loss, cash flow provided by operating activities or diluted loss per share as indicators of our performance or liquidity or any other measures of performance or liquidity derived in accordance with GAAP. In addition, our non-GAAP financial measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes.

The presentations of Adjusted EBITDA, Free Cash Flow and Adjusted EPS are intended to enhance the usefulness of our financial information by providing measures which management internally use to assess and evaluate the overall performance of its business and those of possible acquisition candidates, and highlight trends in the overall business.

Adjusted EBITDA

We use Adjusted EBITDA to provide further information that is useful to an understanding of the financial covenants contained in the credit facilities as of March 31, 2013 of our most significant subsidiary, Covanta Energy, through which we conduct our core waste and energy services business, and as additional ways of viewing aspects of its operations that, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of our core business. The calculation of Adjusted EBITDA is based on the definition in Covanta Energy's credit facilities as of March 31, 2013, which we have guaranteed. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, as adjusted for additional items subtracted from or added to net loss. Because our business is substantially comprised of that of Covanta Energy, our financial performance is substantially similar to that of Covanta Energy. For this reason, and in order to avoid use of multiple financial measures which are not all from the same entity, the calculation of Adjusted EBITDA and other financial measures presented herein are ours, measured on a consolidated basis, less the results of operations of our insurance subsidiaries.

Under the credit facilities as of March 31, 2013, Covanta Energy is required to satisfy certain financial covenants, including certain ratios of which Adjusted EBITDA is an important component. Compliance with such financial covenants is expected to be the principal limiting factor which will affect our ability to engage in a broad range of activities in furtherance of our business, including making certain investments, acquiring businesses and incurring additional debt. Covanta Energy was in compliance with these covenants as of March 31, 2013. Failure to comply with such financial covenants could result in a default under these credit facilities, which default would have a material adverse affect on our financial condition and liquidity.

These financial covenants are measured on a trailing four quarter period basis and the material covenants are as follows:

  • maximum Covanta Energy leverage ratio of 4.00 to 1.00, which measures Covanta Energy's Consolidated Adjusted Debt (which is the principal amount of its consolidated debt less certain restricted funds dedicated to repayment of project debt principal and construction costs) to its Adjusted EBITDA (which for purposes of calculating the leverage ratio and interest coverage ratio, is adjusted on a pro forma basis for acquisitions and dispositions made during the relevant period); and

  • minimum Covanta Energy interest coverage ratio of 3.00 to 1.00, which measures Covanta Energy's Adjusted EBITDA to its consolidated interest expense plus certain interest expense of ours, to the extent paid by Covanta Energy.

In order to provide a meaningful basis for comparison, we are providing information with respect to our Adjusted EBITDA for the three months ended March 31, 2013 and 2012, reconciled for each such periods to net loss and cash flow provided by operating activities, which are believed to be the most directly comparable measures under GAAP.

Free Cash Flow

Free Cash Flow is defined as cash flow provided by operating activities, excluding the cash flow provided by or used in our insurance subsidiaries, less maintenance capital expenditures, which are capital expenditures primarily to maintain our existing facilities. We use the non-GAAP measure of Free Cash Flow as a criterion of liquidity and performance-based components of employee compensation. We use Free Cash Flow as a measure of liquidity to determine amounts we can reinvest in our core businesses, such as amounts available to make acquisitions, invest in construction of new projects, make principal payments on debt, or amounts we can return to our stockholders through dividends and/or stock repurchases.

In order to provide a meaningful basis for comparison, we are providing information with respect to our Free Cash Flow for the three months ended March 31, 2013 and 2012, reconciled for each such periods to cash flow provided by operating activities, which we believe to be the most directly comparable measure under GAAP.

Adjusted EPS

Adjusted EPS excludes certain income and expense items that are not representative of our ongoing business and operations, which are included in the calculation of Diluted Earnings Per Share in accordance with GAAP. The following items are not all-inclusive, but are examples of reconciling items in prior comparative and future periods. They would include the results of operations of our insurance subsidiaries, write-off of assets and liabilities, the effect of derivative instruments not designated as hedging instruments, significant gains or losses from the disposition or restructuring of businesses, gains and losses on assets held for sale, transaction-related costs, income and loss on the extinguishment of debt and other significant items that would not be representative of our ongoing business.

We will use the non-GAAP measure of Adjusted EPS to enhance the usefulness of our financial information by providing a measure which management internally uses to assess and evaluate the overall performance and highlight trends in the ongoing business.

In order to provide a meaningful basis for comparison, we are providing information with respect to our Adjusted EPS for the three months ended March 31, 2013 and 2012, reconciled for each such periods to diluted loss per share, which is believed to be the most directly comparable measure under GAAP.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this press release 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 Holding Corporation and its subsidiaries ("Covanta") or industry results, 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 us are not guarantees or indicative of future performance. Important factors, risks and uncertainties that could cause actual results to differ materially from those forward-looking statements include, but are not limited to:

  • fluctuations in the prices of energy, waste disposal, scrap metal and commodities;
  • adoption of new laws and regulations in the United States and abroad, including energy laws, environmental laws, labor laws and healthcare laws;
  • the fee structures of our contracts;
  • our ability to avoid adverse publicity relating to our business expansion efforts;
  • advances in technology;
  • difficulties in the operation of our facilities, including fuel supply and energy delivery interruptions, failure to obtain regulatory approvals, equipment failures, labor disputes and work stoppages, and weather interference and catastrophic events;
  • failure to maintain historical performance levels at our facilities and our ability to retain the rights to operate facilities we do not own;
  • difficulties in the financing, development and construction of new projects and expansions, including increased construction costs and delays;
  • our ability to realize the benefits of long-term business development and bear the costs of business development over time;
  • the scalability of our business;
  • limits of insurance coverage;
  • our ability to avoid defaults under our long-term contracts;
  • performance of third parties under our contractual arrangements and such third parties' observance of laws and regulations;
  • concentration of suppliers and customers;
  • geographic concentration of facilities;
  • increased competitiveness in the energy and waste industries;
  • changes in foreign currency exchange rates;
  • limitations imposed by our existing indebtedness and our ability to perform our financial obligations and guarantees and to refinance our existing indebtedness;
  • exposure to counterparty credit risk and instability of financial institutions in connection with financing transactions;
  • our ability to utilize net operating loss carryforwards;
  • restrictions in our certificate of incorporation and debt documents regarding strategic alternatives;
  • failures of disclosure controls and procedures and internal controls over financial reporting;
  • our ability to attract and retain talented people;
  • general economic conditions in the United States and abroad, including the availability of credit and debt financing and market conditions at the time our contracts expire; and
  • other risks and uncertainties affecting our businesses described in Item 1A. Risk Factors of Covanta's Annual Report on Form 10-K for the year ended December 31, 2012 and in other filings by Covanta with the SEC.

Although we believe that our 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 of our forward-looking statements. Our 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 we do 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.

Source: Covanta Holding Corporation

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