Covanta profits increase on strong recycled
Covanta Holding Corporation reported financial
results for the 3 and 9 months ended September 30, 2011.
For the 3 months ended September 30, 2011,
operating revenues increased to $432 million, up $29 million
or 7 percent, from $403 million in the prior year comparative
period. Two-thirds of this increase is attributable to higher
construction revenue related to the Honolulu expansion project.
The remainder of the increase was driven
by strong recycled metals pricing, contract escalations and higher
tip fee pricing and volume. These increases were partially offset
by lower debt service pass through revenues, lower energy revenues
from biomass plants and lower energy pricing.
Operating expenses of $345 million declined
3 percent from $357 million in the prior year comparative period
as higher construction costs in the current quarter partially
offset $32 million of asset write-downs in the third quarter
of last year.
Adjusted EBITDA of $152 million was up $2
million compared with last year’s third quarter of $150 million
as increases in recycled metals revenues and waste revenues were
offset by lower debt service revenue and lower contribution from
our biomass facilities.
Free cash flow was $106 million in the third
quarter, an increase of $11 million compared to $95 million in
the prior year comparative period, primarily attributable to
an improvement in working capital, which was partially offset
by a year over year increase in maintenance capital expenditures.
Adjusted EPS for the quarter was $0.24, which
was flat with last year’s third quarter, as the lower number
of shares outstanding due to the company’s common stock buyback
program and improved operating income, were offset by higher
interest expense and a higher effective tax rate.
For the 9 months ended September 30, 2011,
total operating revenues increased 5 percent to $1,220 million.
Free cash flow was $215 million for the year-to-date period compared
to $236 million for the same period last year. Adjusted EBITDA
was $346 million compared to $341 million for the same period
last year and Adjusted EPS was $0.26 compared to $0.24 Adjusted
EPS in 2010.
During the quarter, Covanta repurchased $81
million in common stock, or 5.2 million shares (3.6 percent of
the company’s outstanding shares), at a weighted average cost
of $15.58 per share. Aggregate repurchases since June 2010 total
$300 million, or 18.7 million shares, representing 12.1 percent
of outstanding shares. The company also paid a quarterly dividend
on July 6, 2011 and declared another quarterly dividend which
was paid on October 14, 2011, both for $0.075 per share. During
Covanta also increased its share repurchase authorization by
$100 million, bringing the total authorized amount to $400 million.
Covanta has now returned $565 million to shareholders since the
inception of its shareholder return program in the third quarter
of last year.