SOURCE: Covanta Holding Corp

Covanta Holding Corp

February 11, 2014 16:30 ET

Covanta Holding Corporation Reports 2013 Full Year and Fourth Quarter Results and Provides 2014 Guidance

MORRISTOWN, NJ--(Marketwired - Feb 11, 2014) - 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 and twelve months ended December 31, 2013.

   
  Consolidated
(Unaudited, in millions, except EPS) FY 2013   FY 2013
Guidance
(1)
Adjusted EBITDA $490   $480 - $495
Free Cash Flow $237   $220 - $240
Adjusted EPS $0.36   $0.33 - $0.43
       
  Continuing Operations (2)
(Unaudited, in millions, except EPS) FY 2012   FY 2013
Revenue $1,643   $1,630
Income from Continuing Operations $134   $45
Adjusted EBITDA $507   $494
Free Cash Flow $277   $245
Adjusted EPS $0.58   $0.38
       

Full Year 2013 Highlights:

  • Signed 20 year waste transport and disposal agreement with New York City for an estimated $2.8 billion in revenue
  • Renewed / extended waste disposal and service contracts totaling approximately 1.5 million annual tons with an average term of 5 years
  • Acquired 1,050 ton-per-day EfW facility in Camden, New Jersey
  • Invested over $80 million in organic growth
  • Returned $121 million of capital to shareholders via dividend and share repurchases

Commenting on Covanta's 2013 performance and 2014 outlook, Anthony Orlando, Covanta's President and CEO stated, "In 2013, we took a number of concrete steps to create long-term value, most notably signing a 20 year waste contract with New York City, acquiring the Camden, New Jersey EfW facility, extending several municipal client contracts and investing in numerous metal recovery systems."

Mr. Orlando continued, "As we head into 2014, we are focused on optimizing our Energy-from-Waste business by continuing to provide great customer service, extending contracts, executing our proactive maintenance program, increasing metal recovery and growing our sustainable waste solutions business."

Full Year 2013 - From Continuing Operations
For the twelve months ended December 31, 2013, total operating revenues declined by $13 million to $1,630 million from $1,643 million in 2012. The primary driver for the decline was lower construction revenue due to the Honolulu facility expansion commencing commercial operation in 2012, which was partially offset by an increase in same store North America EfW revenue and higher revenue due to service fee contract transitions.

Excluding certain items (3), operating expenses of $1,400 million for 2013 decreased by $6 million compared to $1,406 million in 2012. The decline in operating expenses was driven by lower construction expense for the same reason noted above, as well as the benefit of a power purchase agreement buyout and higher renewable energy credits in 2013, both of which are reductions to operating expenses. These factors were partially offset by higher overall operating expenses, including higher costs related to service fee contract transitions and increased plant maintenance. As a result, operating income declined by $7 million to $230 million in 2013 versus $237 million in 2012.

Adjusted EBITDA declined by $13 million to $494 million from $507 million in 2012. The decline was driven by the net impact of service fee contract transitions and reduced North America EfW plant operating margins on a same store basis. These factors were partially offset by improved biomass profit and the acquisition of the Camden EfW facility.

Free Cash Flow for 2013 was $245 million compared to $277 million in the prior year period. The decline was largely driven by lower Adjusted EBITDA and higher cash interest expense.

Adjusted EPS of $0.38 was down $0.20 compared to $0.58 in 2012. The decline was driven by lower operating income, a higher effective tax rate, higher interest expense and lower equity income. These factors were partially offset by the benefit of share repurchases.

Shareholder Returns
In 2013, the Company increased its annual cash dividend to $0.66 per share and returned $121 million to shareholders, consisting of $87 million in cash dividends and $34 million in share repurchases (1.3% of common stock outstanding).

Fourth Quarter Results - From Continuing Operations
For the three months ended December 31, 2013, total operating revenues declined by $7 million to $422 million from $429 million in 2013.

Excluding certain items (4), operating expenses decreased by $11 million to $336 million versus $347 million in 2012. As a result, operating income increased by $4 million to $86 million in 2013 versus $82 million in 2012.

Adjusted EBITDA increased by $6 million to $152 million compared to $146 million in 2012.

Free Cash Flow declined by $27 million to $33 million in 2013 versus $60 million in the prior year period,

Adjusted EPS was $0.18 compared to $0.22 in 2012.

Discontinued Operations
During the fourth quarter of 2013, our development projects in the United Kingdom met the criteria for classification as discontinued operations. Consequently, all corresponding prior year periods have been reclassified to conform to this presentation.

2014 Guidance
The Company is establishing guidance for 2014 for the following key metrics:

(In millions, except per share amounts)

 Metric 2013
Actual
2014
Guidance Range
 Adjusted EBITDA $ 494 $ 470 - $ 500
 Free Cash Flow $ 245 $ 170 - $ 210
  Excluding Construction Working Capital $ 251 $ 215 - $ 245
 Adjusted EPS $ 0.38 $ 0.35 - $ 0.50
     

Conference Call Information
Covanta will host a conference call at 8:30 AM (Eastern) on Wednesday, February 12, 2014 to discuss its fourth 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.covanta.com.

A replay will be available one hour after the end of the conference call through 9:00 AM (Eastern) Wednesday, February 19, 2014. 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 10038565. The webcast will also be archived on www.covanta.com.

About Covanta
Covanta is a world leader in providing sustainable waste and energy solutions. The Company's 45 Energy-from-Waste facilities provide communities and businesses around the world with environmentally sound solid waste disposal by using 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 clean, renewable electricity to power one million homes and recycle over 440,000 tons of metal. Energy-from-Waste facilities reduce greenhouse gases, complement recycling and are a critical component to sustainable solid waste management. For more information, visit www.covanta.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.

(1) As of October 23, 2013.

(2) See Discontinued Operations discussion below.

(3) Includes pension plan settlement (gain) expense of $(6) million and $11 million, respectively, and net non-cash write-offs (gains) of $15 million and $(57) million, respectively 2013 and 2012, as well as transition to run-off of our insurance business of $7 million for 2012. For additional information, see Exhibit 4A of this press release.

(4) Includes pension plan settlement expense of $11 million in Q412 and net non-cash gains of $1 million and $44 million for Q413 and Q412, respectively. For additional information, see Exhibit 4A of this press release.

   
   
Covanta Holding Corporation     Exhibit 1  
Consolidated Statements of Operations  
             
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2013     2012(a)     2013     2012(a)  
    (Unaudited)
(In millions, except per share amounts)
 
Operating revenues                                
  Waste and service revenues   $ 266     $ 263     $ 1,008     $ 1,010  
  Recycled metals revenues     21       17       73       72  
  Energy revenues     109       97       431       394  
  Other operating revenues     26       52       118       167  
    Total operating revenues     422       429       1,630       1,643  
Operating expenses                                
  Plant operating expenses     233       227       993       962  
  Other operating expenses     27       56       94       156  
  General and administrative expenses     20       20       84       84  
  Depreciation and amortization expense     53       50       210       195  
  Net interest expense on project debt     3       5       13       27  
  Net (gains) write-offs (b)     (1 )     (44 )     15       (57 )
    Total operating expenses     335       314       1,409       1,367  
Operating income     87       115       221       276  
Other income (expense)                                
  Investment income     --       1       --       1  
  Interest expense     (30 )     (27 )     (118 )     (94 )
  Non-cash convertible debt related expense     (7 )     (6 )     (28 )     (25 )
  Loss on extinguishment of debt     --       (1 )     (1 )     (3 )
  Other income, net     4       --       4       3  
    Total other expenses     (33 )     (33 )     (143 )     (118 )
Income from continuing operations before income tax (expense) benefit and equity in net income from unconsolidated investments     54       82       78       158  
Income tax (expense) benefit     (29 )     4       (40 )     (32 )
Equity in net income from unconsolidated investments     2       --       6       10  
Income from continuing operations     27       86       44       136  
Income (loss) from discontinued operations, net of income tax benefit of $0, $0, $1 and $5, respectively (a)     1       (3 )     (52 )     (20 )
Net Income (Loss)     28       83       (8 )     116  
Noncontrolling interests:                                
Less: Net (income) loss from continuing operations attributable to noncontrolling interests in subsidiaries     --       (1 )     1       (2 )
Net Income (Loss) Attributable to Covanta Holding Corporation   $ 28     $ 82     $ (7 )   $ 114  
                                 
                                 
                                 
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2013     2012(a)     2013     2012(a)  
    (Unaudited)
(In millions, except per share amounts)
 
Amounts Attributable to Covanta Holding Corporation stockholders:                                
  Continuing operations   $ 27     $ 85     $ 45     $ 134  
  Discontinued operations (a)     1       (3 )     (52 )     (20 )
Net Income (Loss) Attributable to Covanta Holding Corporation   $ 28     $ 82     $ (7 )   $ 114  
                                 
Earnings (Loss) Per Share Attributable to Covanta Holding Corporation stockholders:                                
Basic                                
  Continuing operations   $ 0.21     $ 0.65     $ 0.35     $ 1.02  
  Discontinued operations (a)     0.01       (0.02 )     (0.40 )     (0.15 )
  Covanta Holding Corporation   $ 0.22     $ 0.63     $ (0.05 )   $ 0.87  
Weighted Average Shares     129       130       129       132  
                                 
Diluted                                
  Continuing operations   $ 0.21     $ 0.64     $ 0.35     $ 1.01  
  Discontinued operations (a)     0.01       (0.02 )     (0.40 )     (0.15 )
  Covanta Holding Corporation   $ 0.22     $ 0.62     $ (0.05 )   $ 0.86  
Weighted Average Shares     130       132       130       133  
                                 
Cash Dividend Declared Per Share:   $ 0.165     $ 0.15     $ 0.66     $ 0.60  
                                 
Supplemental Information - Non-GAAP                                
  Adjusted EPS (c)   $ 0.19     $ 0.20     $ 0.36     $ 0.53  
                                 
(a) During the fourth quarter of 2013, our development projects in the United Kingdom met the criteria to be classified as discontinued operations. Consequently, all corresponding prior year periods presented in our consolidated financial statements have been reclassified to reflect these assets as discontinued operations.  
(b) For additional information, see Exhibit 4B of this Press Release.  
(c) For additional information, see Exhibit 4 of this Press Release.  
   
   
   
Covanta Holding Corporation   Exhibit 2  
Consolidated Balance Sheets      
       
    As of December 31,  
    2013     2012(a)  
    (Unaudited)        
    (In millions, except per share amounts)  
ASSETS      
Current:                
  Cash and cash equivalents   $ 198     $ 243  
  Restricted funds held in trust     41       53  
  Receivables (less allowances of $4 and $6, respectively)     265       256  
  Unbilled service receivables     16       18  
  Deferred income taxes     25       18  
  Note Hedge     78       --  
  Prepaid expenses and other current assets     110       97  
  Assets held for sale (a)     7       55  
Total Current Assets     740       740  
  Property, plant and equipment, net     2,636       2,559  
  Investments in fixed maturities at market (cost: $32 and $36, respectively)     32       36  
  Restricted funds held in trust     126       161  
  Unbilled service receivables     13       17  
  Waste, service and energy contract intangibles, net     364       399  
  Other intangible assets, net     20       23  
  Goodwill     249       249  
  Investments in investees and joint ventures     47       49  
  Other assets     151       293  
Total Assets   $ 4,378     $ 4,526  
LIABILITIES AND EQUITY                
Current:                
  Current portion of long-term debt   $ 528     $ 3  
  Current portion of project debt     55       80  
  Accounts payable     24       40  
  Accrued expenses and other current liabilities     250       235  
  Liabilities held for sale (a)     2       2  
Total Current Liabilities     859       360  
  Long-term debt     1,557       2,012  
  Project debt     181       237  
  Deferred income taxes     722       691  
  Waste, service and other contract intangibles, net     30       35  
  Other liabilities     118       136  
Total Liabilities     3,467       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 136 and 159 shares, respectively; outstanding 130 and 132 shares, respectively)     14       16  
  Additional paid-in capital     790       806  
  Accumulated other comprehensive (loss) income     (2 )     7  
  Accumulated earnings     106       222  
  Treasury stock, at par     (1 )     (3 )
    Total Covanta Holding Corporation stockholders equity     907       1,048  
  Noncontrolling interests in subsidiaries     4       7  
Total Equity     911       1,055  
Total Liabilities and Equity   $ 4,378     $ 4,526  
                 
(a) See Exhibit 1 - Note (a) of this Press Release.         
                 
                 
                 
Covanta Holding Corporation     Exhibit 3  
Consolidated Statements of Cash Flow        
    Twelve Months Ended
December 31,
 
    2013     2012(a)  
    (Unaudited, in millions)  
OPERATING ACTIVITIES:                
Net (loss) income   $ (8 )   $ 116  
  Less: Loss from discontinued operations, net of tax expense (a)     (52 )     (20 )
Income from continuing operations     44       136  
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities from continuing operations:                
  Depreciation and amortization expense     210       195  
  Net write-offs (gains) (b)     15       (57 )
  Pension plan settlement (gain) loss     (6 )     11  
  Loss on extinguishment of debt     1       3  
  Non-cash convertible debt related expense     28       25  
  Stock-based compensation expense     15       16  
  Deferred income taxes     28       20  
  Other, net     2       (5 )
  Change in restricted funds held in trust     20       34  
  Change in working capital, net of effects of acquisitions     (33 )     (21 )
Net cash provided by operating activities from continuing operations     324       357  
Net cash used in operating activities of discontinued operations (a)     (8 )     (15 )
Net cash provided by operating activities     316       342  
INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (188 )     (126 )
  Acquisition of business, net of cash acquired     (57 )     (94 )
  Acquisition of noncontrolling interest in subsidiary     (14 )     --  
  Acquisition of land use rights     --       (1 )
  Payment received for loan issued for the Harrisburg EfW facility     9       --  
  Property insurance proceeds     4       8  
  Other, net     (12 )     (9 )
Net cash used in investing activities from continuing operations     (258 )     (222 )
Net cash provided by investing activities of discontinued operations (a)     --       9  
Net cash used in investing activities     (258 )     (213 )
FINANCING ACTIVITIES:                
  Proceeds from borrowings on long-term debt     22       1,034  
  Payment of deferred financing costs     (1 )     (33 )
  Principal payments on long-term debt     (3 )     (622 )
  Principal payments on project debt     (83 )     (424 )
  Convertible debenture repurchases     --       (25 )
  Payments of borrowings on revolving credit facility     (595 )     (191 )
  Proceeds from borrowings on revolving credit facility     645       251  
  Change in restricted funds held in trust     27       65  
  Cash dividends paid to stockholders     (65 )     (90 )
  Common stock repurchased     (34 )     (88 )
  Financing of insurance premiums, net     --       (10 )
  Distributions to partners of noncontrolling interests in subsidiaries     --       (1 )
  Other, net     (24 )     2  
Net cash used in financing activities from continuing operations     (111 )     (132 )
Net cash provided by financing activities of discontinued operations (a)     8       15  
Net cash used in financing activities     (103 )     (117 )
Effect of exchange rate changes on cash and cash equivalents     (1 )     --  
Net (decrease) increase in cash and cash equivalents     (46 )     12  
Cash and cash equivalents at beginning of period     246       234  
Cash and cash equivalents at end of period     200       246  
Less: Cash and cash equivalents of discontinued operations at end of period     2       3  
Cash and cash equivalents of continuing operations at end of period   $ 198     $ 243  
                 
(a) See Exhibit 1 - Note (a) of this Press Release.  
(b) For additional information, see Exhibit 4B of this Press Release.  
   
   
   
Covanta Holding Corporation     Exhibit 4
Reconciliation of Diluted Earnings Per Share to Adjusted EPS
                             
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
     
    2013     2012(a)     2013     2012(a)     Full Year
Estimated 2014
  
    (Unaudited)      
Continuing Operations - Diluted EPS   $ 0.21     $ 0.64     $ 0.35     $ 1.01     $0.35 - $0.50
Continuing Operations - Reconciling Items (b)     (0.03 )     (0.42 )     0.03       (0.43 )   --
Continuing Operations - Adjusted EPS   $ 0.18     $ 0.22     $ 0.38     $ 0.58     $0.35 - $0.50
                                     
Discontinued Operations - Diluted EPS (c)   $ 0.01     $ (0.02 )   $ (0.40 )   $ (0.15 )    
Discontinued Operations - Reconciling Items (b)     --       --       0.38       0.10      
Discontinued Operations - Adjusted EPS     0.01       (0.02 )     (0.02 )     (0.05 )    
Consolidated - Adjusted EPS   $ 0.19     $ 0.20     $ 0.36     $ 0.53      
                                     
(a) See Exhibit 1 - Note (a) of this Press Release.
(b) For details related to the Reconciling Items, see Exhibit 4A of this Press Release.
(c) Discontinued Operations - Diluted EPS for the twelve months ended December 31, 2012 includes $0.01 per share related to independent power production facilities in Asia.
 
 
 
Covanta Holding Corporation             Exhibit 4A  
Reconciling Items                        
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2013     2012(a)     2013     2012(a)  
    (Unaudited)
(In millions, except per share amounts)
 
Continuing Operations - Reconciling Items                                
  Operating loss related to insurance subsidiaries(b)   $ 1     $ 1     $ 2     $ 10  
  Net (gains) write-offs (c)     (1 )     (44 )     15       (57 )
  Severance and other restructuring     2       --       2       --  
  Pension plan settlement expense (gain) (d)     --       11       (6 )     11  
  Gain related to trust distribution (e)     (4 )     --       (4 )     --  
  Loss on extinguishment of debt     --       1       1       3  
  Loss on derivative instruments not designated as hedging instruments     (1 )     --       (1 )     (1 )
  Effect of foreign exchange gain on indebtedness     --       --       --       (3 )
  Other     (1 )     (1 )     --       --  
    Total Reconciling Items, pre-tax     (4 )     (32 )     9       (37 )
  Proforma income tax impact     --       (24 )     (5 )     (22 )
  Grantor trust activity     --       1       --       1  
    Total Continuing Operations Reconciling Items, net of tax   $ (4 )   $ (55 )   $ 4     $ (58 )
                                 
Continuing Operations - Diluted EPS Impact from Reconciling Items   $ (0.03 )   $ (0.42 )   $ 0.03     $ (0.43 )
                                 
                                 
                                 
Discontinued Operations - Reconciling Items (a)                                
  Net write-offs (c)   $ --     $ --     $ 47     $ 13  
  Severance and other restructuring     --       --       3       --  
  Effect of foreign exchange gain on indebtedness     (1 )     --       (1 )     (1 )
  Transaction-related costs     1       --       1       1  
    Total Discontinued Operations - Reconciling Items   $ --     $ --     $ 50     $ 13  
                                 
Discontinued Operations - Diluted EPS Impact from Reconciling Items   $ --     $ --     $ 0.38     $ 0.10  
   
(a) See Exhibit 1 - Note (a) of this Press Release.  
(b) During the year ended December 31, 2012, we transitioned our remaining insurance business to run-off and recorded additional losses and reserve increases of $7 million primarily relating to adverse loss development.  
(c) For details on the components of Net (gains) write-offs, see Exhibit 4B of this Press Release.  
(d) During the year ended December 31, 2013 and 2012, we recorded a defined benefit pension plan settlement (gain) expense of $(6) million and $11 million, respectively.  
(e) In 2013, we recorded a $4 million gain related to a distribution received from an insurance subsidiary grantor trust.  
   
   
   
Covanta Holding Corporation           Exhibit 4B  
Net (Gains) Write-Offs                  
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2013     2012(a)     2013   2012(a)  
    (Unaudited, in millions)  
Net (Gains) Write-Offs - Continuing Operations                              
  Write-down of Wallingford EfW facility assets(b)   $ --     $ --     $ 9   $ --  
  Write-down of equity investment in biomass facility (c)     (1 )     --       2     --  
  Write-off of loan issued for the Harrisburg EfW facility to fund certain facility improvements (d)     --       --       4     --  
  Write-off of intangible liability (e)     --       --       --     (29 )
  Write-down of renewable fuels project (f)     --       --       --     16  
  Net gain related to lease termination (g)     --       (44 )     --     (44 )
    Total net (gains) write-offs - Continuing Operations   $ (1 )   $ (44 )   $ 15   $ (57 )
                               
Net Write-Offs - Discontinued Operations                              
Development costs - UK (h)   $ --     $ --     $ 47   $ 11  
Independent power production assets - Asia (i)     --       --       --     2  
  Total net write-offs - Discontinued Operations   $ --     $ --     $ 47   $ 13  
                               
(a) See Exhibit 1 - Note (a) of this Press Release.  
(b) During the twelve months ended December 31, 2013, we recorded a non-cash write-down of $9 million resulting from an impairment charge related to our Wallingford EfW facility assets in Connecticut.  
(c) During the twelve months ended December 31, 2013, we recorded a non-cash write-down of $2 million related to our 55% equity investment in the Pacific Ultrapower Chinese Station biomass facility in California.  
(d) During the twelve months ended December 31, 2013, we recorded a non-cash write-off of $4 million associated with funds advanced related to the Harrisburg EfW facility.  
(e) During the twelve months ended December 31, 2012, we recorded a non-cash write-off of an intangible liability in connection with a contract amendment for our Essex EfW facility, which resulted in a gain of $29 million.  
(f) During the twelve months ended December 31, 2012, we recorded a non-cash write-off of $16 million representing the capitalized costs of a suspended renewable fuels project.  
(g) During the twelve months ended December 31, 2012, we recorded a net gain of $44 million related to the termination of the pre-existing lease in connection with the acquisition of the Delaware Valley energy-from-waste facility.  
(h) During the twelve months ended December 31, 2013 and 2012, we recorded non-cash write-offs of $47 million and $11 million, respectively, of capitalized development costs and land related to United Kingdom development projects which we ceased to pursue in their current form and are classified as discontinued operations.  
(i) During the twelve months ended December 31, 2012, we recorded a non-cash write-off of $2 million related to certain independent power production facilities located in Asia.  
   
   
   
Covanta Holding Corporation     Exhibit 4C  
Effective Tax Rate ("ETR")  
   
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2013     2012(a)     2013     2012(a)  
    (Unaudited)  
Effective Tax Rate from Continuing Operations   55 %   (5 )%   51 %   20 %
                         
(a) See Exhibit 1 - Note (a) of this Press Release.  
   
                         
                         
Covanta Holding Corporation     Exhibit 5
Reconciliation of Net Income to Adjusted EBITDA
                             
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
     
    2013     2012(a)     2013     2012(a)     Full Year
Estimated 2014
  
Continuing Operations - Adjusted EBITDA   (Unaudited, in millions)      
Net Income from Continuing Operations Attributable to Covanta Holding Corporation   $ 27     $ 85     $ 45     $ 134     $45 - $65
                                     
Operating loss related to insurance subsidiaries     1       1       2       10     (2) - 0
                                     
Depreciation and amortization expense     53       50       210       195     217 - 207
                                     
Debt service:                                    
  Net interest expense on project debt     3       5       13       27      
  Interest expense     30       27       118       94      
  Non-cash convertible debt related expense     7       6       28       25      
  Investment income     --       (1 )     --       (1 )    
Subtotal debt service     40       37       159       145     162 - 146
                                     
Income tax expense (benefit)     29       (4 )     40       32     30 - 55
                                     
Gain related to trust distribution (b)     (4 )     --       (4 )     --      
                                     
Net (gains) write-offs (c)     (1 )     (44 )     15       (57 )    
                                     
Pension plan settlement expense (gain) (b)     --       11       (6 )     11      
                                     
Loss on extinguishment of debt     --       1       1       3      
                                     
Net income (loss) attributable to noncontrolling interests in subsidiaries     --       1       (1 )     2     0 - 4
                                     
Other adjustments:                                    
  Debt service billings in excess of revenue recognized     --       3       9       9      
  Non-cash compensation expense     3       3       15       16      
  Other non-cash items (d)     4       2       9       7      
Subtotal other adjustments     7       8       33       32     18 - 23
                                     
Total adjustments - Continuing Operations     125       61       449       373      
Continuing Operations - Adjusted EBITDA   $ 152     $ 146     $ 494     $ 507     $470 - $500
                                     
Discontinued Operations - Adjusted EBITDA (a)                                    
Income (loss) from discontinued operations   $ 1     $ (3 )   $ (52 )   $ (20 )    
Income tax benefit     --       --       (1 )     (5 )    
Net write-offs (c)     --       --       47       13      
Severance and other restructuring     --       1       3       1      
Other non-cash items     1       --       (1 )     --      
Discontinued Operations - Adjusted EBITDA   $ 2     $ (2 )   $ (4 )   $ (11 )    
                                     
Consolidated - Adjusted EBITDA   $ 154     $ 144     $ 490     $ 496      
                                     
(a) See Exhibit 1 - Note (a) of this Press Release.
(b) See Exhibit 4A - of this Press Release.
(c) For details on the components of Net (gains) write-offs, see Exhibit 4B of this Press Release.
(d) Includes certain non-cash items that are added back under the definition of Adjusted EBITDA in Covanta Energy Corporation's credit agreement.
 
 
 
Covanta Holding Corporation     Exhibit 6
Consolidated Reconciliation of Cash Flow Provided by Operating Activities to Adjusted EBITDA
                             
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
     
    2013     2012(a)     2013     2012(a)     Full Year Estimated 2014
    (Unaudited, in millions)      
Cash flow provided by operating activities from continuing operations   $ 49     $ 77     $ 324     $ 357     $265 - $310
                                     
Cash flow used in operating activities from insurance subsidiaries     4       1       8       5     0 - 5
                                     
Debt service     40       37       159       145     162 - 146
                                     
  Change in working capital     69       75       33       21      
  Change in restricted funds held in trust     (3 )     (44 )     (20 )     (34 )    
  Non-cash convertible debt related expense     (7 )     (6 )     (28 )     (25 )    
  Equity in net income from unconsolidated investments     2       --       6       10      
  Dividends from unconsolidated investments     --       (1 )     (7 )     (8 )    
  Current tax provision     8       4       12       12      
  Other     (10 )     3       7       24      
    Sub-total     59       31       3       --     43 - 49
Adjusted EBITDA - Continuing Operations   $ 152     $ 146     $ 494     $ 507     $470 - $500
                                     
Cash flow provided by operating activities from discontinued operations   $ --     $ (3 )   $ (8 )   $ (15 )    
                                     
  Change in working capital     (2 )      (1 )      (2 )      (2    
  Current tax provision     --       --       3       9      
  Other     4       2       3       (3 )    
    Sub-total   $ 2     $ 1     $ 4     $ 4      
Adjusted EBITDA - Discontinued Operations   $ 2     $ (2 )   $ (4 )   $ (11 )    
                                     
Adjusted EBITDA - Consolidated   $ 154     $ 144     $ 490     $ 496      
                                     
                                     
(a) See Exhibit 1 - Note (a) of this Press Release.                   
                                     
                                     
                                     
Covanta Holding Corporation Exhibit 7
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow  
                 
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
     
    2013     2012(a)     2013     2012(a)     Full Year
Estimated 2014
 
    (Unaudited, in millions)      
Free Cash Flow - Consolidated                            
Cash flow provided by operating activities   $ 49     $ 74     $ 316     $ 342      
Plus: Cash flow used in operating activities from insurance subsidiaries     4       1       8       5      
Less: Maintenance capital expenditures (b)     (20 )     (18 )     (87 )     (85 )    
Free Cash Flow   $ 33     $ 57     $ 237     $ 262      
Construction working capital     (24 )     (27 )     (6 )     (7 )    
Free Cash Flow Excluding Construction Working Capital   $ 57     $ 84     $ 243     $ 269      
                                     
Free Cash Flow - Continuing Operations                                    
Cash flow provided by operating activities of continuing operations   $ 49     $ 77     $ 324     $ 357     $265 - $310
Plus: Cash flow used in operating activities from insurance subsidiaries     4       1       8       5     0 - 5
Less: Maintenance capital expenditures (b)     (20 )     (18 )     (87 )     (85 )   (95) - (105)
Continuing Operations Free Cash Flow   $ 33     $ 60     $ 245     $ 277     $170 - $210
Construction working capital     (24 )     (27 )     (6 )     (7 )   (45) - (35)
Free Cash Flow Excluding Construction Working Capital - Continuing Operations   $ 57     $ 87     $ 251     $ 284     $215 - $245
                                     
Weighted Average Diluted Shares Outstanding     130       132       130       133      
                                     
Uses of Continuing Operations Free Cash Flow                                    
Investments:                                    
  Acquisition of business, net of cash acquired   $ (8 )   $ (94 )   $ (57 )   $ (94 )    
  Acquisition of noncontrolling interest in subsidiary     --       --       (14 )     --      
  Property insurance proceeds     --       1       4       8      
  Non-maintenance capital expenditures (c)     (28 )     (14 )     (101 )     (41 )    
  Acquisition of land use rights (c)     --       --       --       (1 )    
  Other growth investments (c)     (1 )     (2 )     (4 )     (2 )    
  Other investing activities, net (d)     9       1       1       (7 )    
Total investments   $ (28 )   $ (108 )   $ (171 )   $ (137 )    
                                     
Return of capital to stockholders:                                    
  Cash dividends paid to stockholders   $ (20 )   $ (39 )   $ (65 )   $ (90 )    
  Common stock repurchased     --       (5 )     (34 )     (88 )    
Total return of capital to stockholders   $ (20 )   $ (44 )   $ (99 )   $ (178 )    
                                     
Capital raising activities:                                    
  Net proceeds from issuance of corporate debt (e)   $ --     $ 328     $ 21     $ 1,001      
  Other financing activities, net     (7 )     12       (24 )     2      
Net proceeds from capital raising activities   $ (7 )   $ 340     $ (3 )   $ 1,003      
                                     
Debt repayments:                                    
  Net cash used for scheduled principal payments on corporate debt   $ (1 )   $ (1 )   $ (3 )   $ (26 )    
  Net cash used for scheduled principal payments on project debt (f)     (6 )     (64 )     (56 )     (121 )    
  Optional repayment of corporate debt (g)     --       --       --       (621 )    
  Net cash used for optional repayment of project debt (h)     --       (238 )     --       (238 )    
Total debt repayments   $ (7 )   $ (303 )   $ (59 )   $ (1,006 )    
                                     
Borrowing activities - Revolving credit facility, net   $ (16 )   $ 40     $ 50     $ 60      
                                     
Short-term borrowing activities - Financing of insurance premiums, net   $ --     $ --     $ --     $ (10 )    
                                     
Distributions to partners of noncontrolling interests in subsidiaries   $ --     $ --     $ --     $ (1 )    
                                     
Effect of exchange rate changes on cash and cash equivalents   $ (2 )   $ (1 )   $ (1 )   $ --      
                                     
Net change in cash and cash equivalents   $ (47 )   $ (16 )   $ (38 )   $ 8      
                                     
(a) See Exhibit 1 - Note (a) of this Press Release.      
                                     
(b) 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
December 31,
    Twelve Months Ended
December 31,
     
    2013     2012     2013     2012    
Maintenance capital expenditures   $ (20 )   $ (18 )   $ (87 )   $ (85 )    
Capital expenditures associated with organic growth initiatives and technology development (c)     (28 )     (9 )     (101 )     (27 )    
Capital expenditures - other (c)     --       (5 )     --       (14 )    
Total purchases of property, plant and equipment   $ (48 )   $ (32 )   $ (188 )   $ (126 )    
                                     
(c) Growth investments includes investments in growth opportunities, including organic growth initiatives, technology, business development, and other similar expenditures. Capital expenditures - other includes capital expenditures associated with property insurance events. Other growth investments include investments primarily in our TARTECH joint venture.      
                                     
Capital expenditures associated with organic growth initiatives and technology development   $ (28 )   $ (9 )   $ (101 )   $ (27 )    
Capital expenditures - other     --       (5 )     --       (14 )    
Total non-maintenance capital expenditures     (28 )     (14 )     (101 )     (41 )    
Acquisition of land use rights     --       --       --       (1 )    
Other growth investments     (1 )     (2 )     (4 )     (2 )    
Less: Capital expenditures associated with property insurance events     --       4       --       13      
Organic growth investments     (29 )     (12 )     (105 )     (31 )    
Acquisition of business, net of cash acquired     (8 )     (94 )     (57 )     (94 )    
Total growth investments   $ (37 )   $ (106 )   $ (162 )   $ (125 )    
                                     
(d) Other investing activities is primarily comprised of net payments from the purchase/sale of investment securities.      
 
(e) Excludes borrowings under Revolving Credit Facility. Calculated as follows:      
                                     
Proceeds from borrowings on long-term debt   $ --     $ 335     $ 22     $ 1,034      
Less: Financing costs related to issuance of long-term debt     --       (7 )     (1 )     (33 )    
Net proceeds from issuance of corporate debt   $ --     $ 328     $ 21     $ 1,001      
                                     
(f) Calculated as follows:                                    
                                     
Total scheduled principal payments on project debt   $ (30 )   $ (100 )   $ (83 )   $ (146 )    
Decrease (increase) in related restricted funds held in trust     24       36       27       25      
Net cash used for principal payments on project debt   $ (6 )   $ (64 )   $ (56 )   $ (121 )    
                                     
(g) Calculated as follows:
                                     
Repayment of Term Loan due 2014   $ --     $ --     $ --     $ (619 )    
Redemption of Convertible Debentures     --       --       --       (2 )    
Total optional repayment of corporate debt   $ --     $ --     $ --     $ (621 )    
                                     
(h) Calculated as follows:
                                     
Total optional principal payments on project debt   $ --     $ (278 )   $ --     $ (278 )    
Decrease in related restricted funds held in trust     --       40       --       40      
Net cash used for optional repayment of project debt   $ --     $ (238 )   $ --     $ (238 )    
                                     
     
Covanta Holding Corporation   Exhibit 8
Calculation of Continuing Operations Key Metrics For 2013 and 2012(a)    
(Unaudited) (In millions, except per share amounts)    
                                 
Adjusted EPS   Three Months Ended     Year Ended     Three Months Ended     Year Ended  
    Mar. 31, 2013     June 30, 2013     Sept. 30, 2013     Dec. 31, 2013     Dec. 31, 2013     Mar. 31, 2012     June 30, 2012     Sept. 30, 2012     Dec. 31, 2012     Dec. 31, 2012  
Continuing Operations - Diluted (Loss) Earnings Per Share   $ (0.17 )   $ 0.09     $ 0.22     $ 0.21     $ 0.35     $ (0.08 )   $ 0.18     $ 0.27     $ 0.64     $ 1.01  
Reconciling Items     (0.02 )     0.03       0.06       (0.03 )     0.03       --       --       (0.02 )     (0.42 )     (0.43 )
Adjusted EPS   $ (0.19 )   $ 0.12     $ 0.28     $ 0.18     $ 0.38     $ (0.08 )   $ 0.18     $ 0.25     $ 0.22     $ 0.58  
                                                                                 
                                                                                 
    Three Months Ended     Year Ended     Three Months Ended     Year Ended  
Reconciling Items   Mar. 31, 2013     June 30, 2013     Sept. 30, 2013     Dec. 31, 2013     Dec. 31, 2013     Mar. 31, 2012     June 30, 2012     Sept. 30, 2012     Dec. 31, 2012     Dec. 31, 2012  
Operating loss related to insurance subsidiaries   $ --     $ 1     $ --     $ 1     $ 2     $ 1     $ --     $ 8     $ 1     $ 10  
Net write-offs (gains)(b)     --       4       12       (1 )     15       --       --       (13 )     (44 )     (57 )
Severance and other restructuring     --       --       --       2       2       --       --       --       --       --  
Pension plan settlement (gain) expense     (6 )     --       --       --       (6 )     --       --       --       11       11  
Loss on extinguishment of debt     1       --       --       --       1       2       --       --       1       3  
Loss on derivative instruments not designated as hedging instruments     --       --       --       (1 )     (1 )     --       --       (1 )     --       (1 )
Effect of foreign exchange gain on indebtedness     --       --       --       --       --       (3 )     --       --       --       (3 )
Gain related to trust distribution     --       --       --       (4 )     (4 )     --       --       --       --       --  
Other     --       --       1       (1 )     --       --       1       --       (1 )     --  
  Total Reconciling Items, pre-tax     (5 )     5       13       (4 )     9       --       1       (6 )     (32 )     (37 )
Pro forma income tax impact     2       (2 )     (5 )     --       (5 )     --       (1 )     3       (24 )     (22 )
Grantor trust activity     --       --       --       --       --       --       --       --       1       1  
  Total Reconciling Items, net of tax   $ (3 )   $ 3     $ 8     $ (4 )   $ 4     $ --     $ --     $ (3 )   $ (55 )   $ (58 )
Diluted (Loss) Earnings Per Share Impact   $ (0.02 )   $ 0.03     $ 0.06     $ (0.03 )   $ 0.03     $ --     $ --     $ (0.02 )   $ (0.42 )   $ (0.43 )
Weighted Average Diluted Shares Outstanding     130       129       130       130       130       134       134       132       132       133  
                                                                                 
                                                                                 
Adjusted EBITDA   Three Months Ended     Year Ended     Three Months Ended     Year Ended  
    Mar. 31, 2013     June 30, 2013     Sept. 30, 2013     Dec. 31, 2013     Dec. 31, 2013     Mar. 31, 2012     June 30, 2012     Sept. 30, 2012     Dec. 31, 2012     Dec. 31, 2012  
Net (Loss) income from Continuing Operations Attributable to Covanta Holding Corporation   $ (23 )   $ 13     $ 28     $ 27     $ 45     $ (11 )   $ 23     $ 37     $ 85     $ 134  
Operating loss related to insurance subsidiaries     --       1       --       1       2       1       --       8       1       10  
Depreciation and amortization expense     53       52       52       53       210       50       49       46       50       195  
Debt service     39       40       40       40       159       32       38       38       37       145  
Income tax (benefit) expense     (16 )     7       20       29       40       (5 )     11       30       (4 )     32  
Gain related to trust distribution     --       --       --       (4 )     (4 )     --       --       --       --       --  
Net write-offs (gains)(b)     --       4       12       (1 )     15       --       --       (13 )     (44 )     (57 )
Pension plan settlement (gain) expense     (6 )     --       --       --       (6 )     --       --       --       11       11  
Loss on extinguishment of debt     1       --       --       --       1       2       --       --       1       3  
Net (loss) income attributable to noncontrolling interests in subsidiaries     (1 )     --       --       --       (1 )     1       (1 )     1       1       2  
Debt service billings in excess of revenue recognized     7       1       1       --       9       6       --       --       3       9  
Non-cash compensation expense     5       4       3       3       15       5       5       3       3       16  
Other non-cash items     2       2       1       4       9       (3 )     5       3       2       7  
Adjusted EBITDA   $ 61     $ 124     $ 157     $ 152     $ 494     $ 78     $ 130     $ 153     $ 146     $ 507  
                                                                                 
                                                                                 
Free Cash Flow   Three Months Ended     Year Ended     Three Months Ended     Year Ended  
    Mar. 31, 2013     June 30, 2013     Sept. 30, 2013     Dec. 31, 2013     Dec. 31, 2013     Mar. 31, 2012     June 30, 2012     Sept. 30, 2012     Dec. 31, 2012     Dec. 31, 2012  
Cash flow provided by operating activities   $ 64     $ 40     $ 171     $ 49     $ 324     $ 108     $ 45     $ 127     $ 77     $ 357  
  Plus: Cash flow used in operating activities from insurance subsidiaries     1       2       1       4       8       1       1       2       1       5  
  Less: Maintenance capital expenditures     (38 )     (19 )     (10 )     (20     (87 )     (28 )     (24 )     (15 )     (18 )     (85 )
Free Cash Flow   $ 27     $ 23     $ 162     $ 33     $ 245     $ 81     $ 22     $ 114     $ 60     $ 277  
Weighted Average Diluted Shares Outstanding     130       129       130       130       130       134       134       132       132       133  
 
(a) See Exhibit 1 - Note (a) of this Press Release.
 
(b) For additional details on Net write-offs (gains), see Exhibit 4B of this Press Release and Item 1. Financial Statements - Note 8. Supplementary Information - Net Write-offs (gains) in our Forms 10-Q filed for the respective periods.
 
   
Covanta Holding Corporation Exhibit 9A
Supplemental Information on Operations (a)  
(Unaudited, $ in millions)  
   
    Twelve Months Ended December 31, 2013
    North America          
    EfW     Other     Total   Other     Consolidated
Revenue:                                    
Waste and Service:                                    
  Waste and Service   $ 926     $ 31     $ 957   $ 1     $ 958
  Debt Service     35       --       35     --       35
  Other Revenues     10       4       14     1       15
Total Waste and Service     971       35       1,006     2       1,008
Recycled Metals:                                    
  Ferrous     56       --       56     --       56
  Non-Ferrous     17       --       17     --       17
Total Recycled Metals     73       --       73     --       73
Energy:                                    
  Energy Sales     298       48       346     30       376
  Capacity     40       15       55     --       55
Total Energy Revenue     338       63       401     30       431
Other Revenue     1       114       115     3       118
Total Revenue   $ 1,383     $ 212     $ 1,595   $ 35     $ 1,630
                                     
Operating Expenses:                                    
Plant Operating Expenses:                                    
  Plant Maintenance     220       12       232     3       235
  Other Plant Operating Expenses     633       95       728     30       758
Total Plant Operating Expenses     853       107       960     33       993
Other Operating Expenses     (20 )     112       92     2       94
General and Administrative     --       79       79     5       84
Depreciation and Amortization     190       18       208     2       210
Net Interest Expense on Project Debt     11       --       11     2       13
Net Write-offs     12       3       15     --       15
Total Operating Expenses   $ 1,046     $ 319     $ 1,365   $ 44     $ 1,409
                                     
Operating Income (Loss)   $ 337     $ (107 )   $ 230   $ (9 )   $ 221
Operating income (loss) excluding Net write-offs (gains):   $ 349     $ (104 )   $ 245   $ (9 )   $ 236
                                     
(a) Supplemental information provided in order to present the financial performance of our North America EfW operations. "Other" within our North America segment includes all non-EfW operations, including transfer stations, landfills, e-waste, biomass facilities, construction and corporate overhead. The results for EfW operations include the results of certain transfer stations and landfills which are dedicated to EfW facilities and share business unit financial reporting. This information is provided as supplemental detail only and is not intended to replace our North America reporting segment.
 
Note: Certain amounts may not total due to rounding.
 
   
Covanta Holding Corporation Exhibit 9B
Supplemental Information on Operations (a)  
(Unaudited, $ in millions)  
   
    Twelve Months Ended December 31, 2012  
    North America              
    EfW     Other     Total     Other     Consolidated  
Revenue:                                        
Waste and Service:                                        
  Waste and Service   $ 914     $ 28     $ 942     $ 1     $ 943  
  Debt Service     47       --       47       --       47  
  Other Revenues     17       2       19       1       20  
Total Waste and Service     978       30       1,008       2       1,010  
Recycled Metals:                                        
  Ferrous     58       --       58       --       58  
  Non-Ferrous     14       --       14       --       14  
Total Recycled Metals     72       --       72       --       72  
Energy:                                        
  Energy Sales     271       42       313       27       340  
  Capacity     36       18       54       --       54  
Total Energy Revenue     307       60       367       27       394  
Other Revenue     --       156       156       11       167  
Total Revenue   $ 1,357     $ 246     $ 1,603     $ 40     $ 1,643  
                                         
Operating Expenses:                                        
Plant Operating Expenses:                                        
  Plant Maintenance     213       13       226       3       229  
  Other Plant Operating Expenses     609       96       705       28       733  
Total Plant Operating Expenses     822       109       931       31       962  
Other Operating Expenses     2       138       140       16       156  
General and Administrative     --       77       77       7       84  
Depreciation and Amortization     176       16       192       3       195  
Net Interest Expense on Project Debt     26       --       26       1       27  
Net Write-offs     (73 )     16