SOURCE: Covanta Holding Corporation

Covanta Holding Corporation

April 22, 2014 16:01 ET

Covanta Holding Corporation Reports 2014 First Quarter Results and Affirms 2014 Guidance

MORRISTOWN, NJ--(Marketwired - Apr 22, 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 months ended March 31, 2014.

     
    Three Months Ended
    March 31,
    2014   2013
Continuing Operations   (Unaudited, $ in millions, except per share amounts)
Revenue   $ 401   $ 372
Net Loss from Continuing Operations   $ (9)   $ (24)
Adjusted EBITDA   $ 87   $ 61
Free Cash Flow   $ 67   $ 27
Adjusted EPS   $ (0.03)   $ (0.19)
             

Q1 2014 Highlights:

  • Higher energy prices due to the cold weather had a net positive effect on results
  • Signed contract extension with Fairfax County, Virginia client - begins February 2016
  • Increased cash dividend by 9% to annualized $0.72 per share

Commenting on Covanta's first quarter performance and 2014 outlook, Anthony Orlando, Covanta's President and CEO stated, "All of our key metrics came in better than last year, largely due to higher energy prices and the timing of planned maintenance. Our steady operations during the cold winter weather resulted in a net benefit, with higher energy prices partially offset by a number of factors. This was all generally consistent with our expectations and our full year guidance outlook is unchanged." 

First Quarter Results - From Continuing Operations
For the three months ended March 31, 2014, total operating revenues increased by $29 million to $401 million. The increase was primarily driven by higher waste tons processed and higher energy pricing at both EfW and biomass facilities, the Camden acquisition in 2013, and our successful efforts to increase the quantity and quality of the metal we recover. These benefits were partially offset by lower construction revenue and lower debt service revenue.

Excluding certain items(1), operating expenses decreased by $3 million to $377 million. The decrease was due to less scheduled maintenance activity due to timing, lower construction expense, and higher renewable energy credits (accounted for as a contra expense), which were partially offset by higher fuel costs and the Camden acquisition. As a result, operating income improved by $32 million to $24 million in the three months ended March 31, 2014. 

Adjusted EBITDA increased by $26 million to $87 million. The improvement was largely driven by higher energy prices and timing of scheduled maintenance activity.

Free Cash Flow improved by $40 million to $67 million in 2014, driven primarily by the improvement in Adjusted EBITDA and the timing of construction working capital.

Adjusted EPS increased by $0.16 to $(0.03) in 2014. The improvement was primarily due to higher operating income.

Dividend
During the quarter, the Company increased its cash dividend by 9% to an annualized $0.72 per share. 

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

Continuing Operations
(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, April 23, 2014 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.covanta.com.

A replay will be available one hour after the end of the conference call through 9:00 AM (Eastern) Friday, May 2, 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 10043707. 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 Q1 2013 includes a pension plan settlement gain of $6 million. In Q1 2014, we recorded a non-cash write-down of $9 million. For additional information, see Exhibit 4A - Note (a) of this press release.

   
   
Exhibit 1  
Covanta Holding Corporation  
Condensed Consolidated Statements of Operations  
   
    Three Months Ended
March 31,
 
    2014     2013  
    (Unaudited)
(In millions, except per share amounts)
 
Operating revenues                
  Waste and service revenues   $ 241     $ 230  
  Recycled metals revenues     21       16  
  Energy revenues     120       102  
  Other operating revenues     19       24  
    Total operating revenues     401       372  
Operating expenses                
  Plant operating expenses     282       280  
  Other operating expenses     18       17  
  General and administrative expenses     21       21  
  Depreciation and amortization expense     53       53  
  Net interest expense on project debt     3       3  
  Net write-offs (a)     9       -  
    Total operating expenses     386       374  
Operating income (loss)     15       (2 )
Other expenses                
  Interest expense     (29 )     (29 )
  Non-cash convertible debt related expense     (8 )     (7 )
  Loss on extinguishment of debt (b)     (2 )     (1 )
    Total other expenses     (39 )     (37 )
Loss from continuing operations before income tax benefit and equity in net income (loss) from unconsolidated investments     (24 )     (39 )
Income tax benefit     14       16  
Equity in net income (loss) from unconsolidated investments     1       (1 )
Loss from continuing operations     (9 )     (24 )
Loss from discontinued operations, net of income tax expense of $0 and $1, respectively     -       (2 )
Net Loss     (9 )     (26 )
Less: Net loss from continuing operations attributable to noncontrolling interests in subsidiaries     -       1  
Net Loss Attributable to Covanta Holding Corporation   $ (9 )   $ (25 )
                 
                 
             
    Three Months Ended
March 31,
 
    2014     2013  
    (Unaudited)
(In millions, except per share amounts)
 
Amounts Attributable to Covanta Holding Corporation stockholders:                
  Continuing operations   $ (9 )   $ (23 )
  Discontinued operations     -       (2 )
Net Loss Attributable to Covanta Holding Corporation   $ (9 )   $ (25 )
                 
Loss Per Share Attributable to Covanta Holding Corporation stockholders:                
Basic                
  Continuing operations   $ (0.07 )   $ (0.17 )
  Discontinued operations     -       (0.02 )
  Covanta Holding Corporation   $ (0.07 )   $ (0.19 )
Weighted Average Shares     129       130  
                 
Diluted                
  Continuing operations   $ (0.07 )   $ (0.17 )
  Discontinued operations     -       (0.02 )
  Covanta Holding Corporation   $ (0.07 )   $ (0.19 )
Weighted Average Shares     129       130  
                 
Cash Dividend Declared Per Share:   $ 0.18     $ 0.165  
                 
Supplemental Information - Non-GAAP                
                 
  Adjusted EPS (c)   $ (0.03 )   $ (0.19 )
                 
(a) For additional information, see Exhibit 4A - note (a) of this Press Release.
(b) For additional information, see Exhibit 7 - Note (f) of this Press Release.
(c) For additional information, see Exhibit 4 of this Press Release.
   
   
   
  Exhibit 2  
Covanta Holding Corporation    
Condensed Consolidated Balance Sheets    
    As of  
    March 31, 2014     December 31, 2013  
    (Unaudited)        
ASSETS   (In millions, except per share amounts)  
Current:                
  Cash and cash equivalents   $ 389     $ 198  
  Restricted funds held in trust     39       41  
  Receivables (less allowances of $4 and $4, respectively)     263       265  
  Unbilled service receivables     17       16  
  Deferred income taxes     30       25  
  Note Hedge     79       78  
  Prepaid expenses and other current assets     116       110  
  Assets held for sale     4       7  
Total Current Assets     937       740  
  Property, plant and equipment, net     2,661       2,636  
  Investments in fixed maturities at market (cost: $32 and $32, respectively)     32       32  
  Restricted funds held in trust     126       126  
  Unbilled service receivables     11       13  
  Waste, service and energy contract intangibles, net     346       364  
  Other intangible assets, net     20       20  
  Goodwill     249       249  
  Investments in investees and joint ventures     39       47  
  Other assets     160       151  
Total Assets   $ 4,581     $ 4,378  
LIABILITIES AND EQUITY                
Current:                
  Current portion of long-term debt (a)   $ 535     $ 528  
  Current portion of project debt     53       55  
  Accounts payable     64       24  
  Accrued expenses and other current liabilities     267       250  
  Liabilities held for sale     1       2  
Total Current Liabilities     920       859  
  Long-term debt (a)     1,754       1,557  
  Project debt     175       181  
  Deferred income taxes     715       722  
  Waste, service and other contract intangibles, net     27       30  
  Other liabilities     117       118  
Total Liabilities     3,708       3,467  
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 136 shares, respectively; outstanding 131 and 130 shares, respectively)     14       14  
  Additional paid-in capital     791       790  
  Accumulated other comprehensive loss     (9 )     (2 )
  Accumulated earnings     74       106  
  Treasury stock, at par     (1 )     (1 )
    Total Covanta Holding Corporation stockholders equity     869       907  
  Noncontrolling interests in subsidiaries     4       4  
Total Equity     873       911  
Total Liabilities and Equity   $ 4,581     $ 4,378  
                 
(a) For additional information, see Exhibit 7 - Note (f) of this Press Release.
   
   
   
Exhibit 3  
Covanta Holding Corporation  
Condensed Consolidated Statements of Cash Flow  
   
    Three Months Ended
March 31,
 
    2014     2013  
    (Unaudited, in millions)  
OPERATING ACTIVITIES:            
Net loss   $ (9 )   $ (26 )
  Less: Loss from discontinued operations, net of tax expense     -       (2 )
Loss from continuing operations     (9 )     (24 )
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities from continuing operations:                
  Depreciation and amortization expense     53       53  
  Net write-offs (a)     9       -  
  Pension plan settlement gain     -       (6 )
  Loss on extinguishment of debt     2       1  
  Non-cash convertible debt related expense     8       7  
  Stock-based compensation expense     4       5  
  Deferred income taxes     (8 )     (11 )
  Other, net     -       (3 )
  Change in restricted funds held in trust     -       9  
  Change in working capital, net of effects of acquisitions     43       33  
Net cash provided by operating activities from continuing operations     102       64  
Net cash provided by (used in) operating activities from discontinued operations     1       (2 )
Net cash provided by operating activities     103       62  
INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (72 )     (63 )
  Acquisition of noncontrolling interest in subsidiary     -       (14 )
  Other, net     (1 )     (10 )
Net cash used in investing activities from continuing operations     (73 )     (87 )
Net cash provided by investing activities from discontinued operations     -       -  
Net cash used in investing activities     (73 )     (87 )
FINANCING ACTIVITIES:                
  Proceeds from borrowings on long-term debt (b)     400       -  
  Payment of deferred financing costs (b)     (10 )     (1 )
  Principal payments on long-term debt (b)     (95 )     (1 )
  Principal payments on project debt     (9 )     (16 )
  Payments of borrowings on revolving credit facility (b)     (115 )     (51 )
  Proceeds from borrowings on revolving credit facility     5       98  
  Change in restricted funds held in trust     2       (3 )
  Cash dividends paid to stockholders     (22 )     -  
  Common stock repurchased     -       (24 )
  Other, net     7       (15 )
Net cash provided by (used in) financing activities from continuing operations     163       (13 )
Net cash (used in) provided by financing activities from discontinued operations     (2 )     3  
Net cash provided by (used in) financing activities     161       (10 )
Effect of exchange rate changes on cash and cash equivalents     (1 )     -  
Net increase (decrease) in cash and cash equivalents     190       (35 )
Cash and cash equivalents at beginning of period     200       246  
Cash and cash equivalents at end of period     390       211  
Less: Cash and cash equivalents of discontinued operations at end of period     1       3  
Cash and cash equivalents of continuing operations at end of period   $ 389     $ 208  
                 
(a)  For additional information, see Exhibit 4A - Note (a) of this Press Release.
(b) See Exhibit 7 - Note (f) of this Press Release.
   
   
   
Exhibit 4
Covanta Holding Corporation
Reconciliation of Diluted (Loss) Income Per Share to Adjusted EPS
 
    Three Months Ended
March 31,
     
    2014     2013     Full Year Estimated 2014 
    (Unaudited)      
Continuing Operations - Diluted (Loss) Income Per Share   $ (0.07 )   $ (0.17 )   $0.31 - $0.46
Reconciling Items (a)     0.04       (0.02 )   0.04
Adjusted EPS   $ (0.03 )   $ (0.19 )   $0.35 - $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,
     
    2014     2013      
    (Unaudited)
(In millions, except per share amounts)
     
Reconciling Items                    
Operating loss related to insurance subsidiaries   $ 1     $ -      
Net write-offs (a)     9        -      
Pension plan settlement gain     -       (6 )    
Loss on extinguishment of debt (b)     2       1      
  Total Reconciling Items, pre-tax     12       (5 )    
Pro forma income tax impact     (6 )     2      
  Total Reconciling Items, net of tax   $ 6     $ (3 )    
Diluted Income (Loss) Per Share Impact   $ 0.04     $ (0.02 )    
Weighted Average Diluted Shares Outstanding     129       130      
(a) We were notified that we were not selected to continue to operate the Hudson Valley energy-from-waste facility in New York past the expiration of the current service contract on June 30, 2014. Therefore, during the quarter ended March 31, 2014, we recorded a $9 million non-cash write-down of the intangible asset associated with the contract we assumed in a 2009 acquisition. 
(b) For additional information, see Exhibit 7 - Note (f) of this Press Release.
   
   
   
Exhibit 5
Covanta Holding Corporation
Reconciliation of Net (Loss) Income to Adjusted EBITDA
 
    Three Months Ended
March 31,
     
    2014     2013     Full Year
Estimated 2014
    (Unaudited, in millions)      
Net Loss (Income) from Continuing Operations Attributable to Covanta Holding Corporation   $ (9 )   $ (23 )   $40 - $59
                     
Operating loss (income) related to insurance subsidiaries     1       -     (2) - 1
                     
Depreciation and amortization expense     53       53     217 - 207
                     
Debt service:                    
  Net interest expense on project debt     3       3      
  Interest expense     29       29      
  Non-cash convertible debt related expense     8       7      
Subtotal debt service     40       39     162 - 146
                     
Income tax (benefit) expense     (14 )     (16 )   25 - 50
Net write-offs (a)     9       -     9
Pension plan settlement gain     -       (6 )    
                     
Loss on extinguishment of debt (b)     2       1     2
                     
Net (loss) income attributable to noncontrolling interests in subsidiaries     -       (1 )   0 - 4
                     
Other adjustments:                    
  Debt service billings in excess of revenue recognized     -       7      
  Non-cash compensation expense     4       5      
  Other non-cash items (c)     1       2      
Subtotal other adjustments     5       14     17 - 22
Total adjustments     96       84      
Adjusted EBITDA   $ 87     $ 61     $470 - $500
   
(a)  For additional information, see Exhibit 4 - Note (a) of this Press Release.
(b) For additional information, see Exhibit 7 - Note (f) of this Press Release.
(c) 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
Consolidated Reconciliation of Cash Flow Provided by Operating Activities to Adjusted EBITDA
 
    Three Months Ended
March 31,
     
    2014     2013     Full Year
Estimated 2014
    (Unaudited, in millions)      
Cash flow provided by operating activities from continuing operations   $ 102     $ 64     $265 - $310
                     
Cash flow used in operating activities from insurance subsidiaries     1       1     0 - 5
                     
Debt service     40       39     162 - 146
                     
  Change in working capital     (43 )     (33 )    
  Change in restricted funds held in trust     -       (9 )    
  Non-cash convertible debt related expense     (8 )     (7 )    
  Equity in net income (loss) from unconsolidated investments     1       (1 )    
  Dividends from unconsolidated investments     -       (1 )    
  Current tax provision     (6 )     (5 )    
  Other     -       13      
    Sub-total     (56 )     (43 )   43 - 39
Adjusted EBITDA   $ 87     $ 61     $470 - $500
                     
                     
 
Exhibit 7
Covanta Holding Corporation
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
 
    Three Months Ended
March 31,
     
    2014     2013     Full Year
Estimated 2014
 
    (Unaudited, in millions)      
Cash flow provided by operating activities from continuing operations   $ 102     $ 64     $265 - $310
Plus: Cash flow used in operating activities from insurance subsidiaries     1       1     0 - 5
Less: Maintenance capital expenditures (a)     (36 )     (38 )   (95) - (105)
Free Cash Flow   $ 67     $ 27     $170 - $210
Construction working capital     (13 )     (24 )   (45) - (35)
Free Cash Flow Excluding Construction Working Capital   $ 80     $ 51     $215 - $245
                     
Weighted Average Diluted Shares Outstanding     129       130      
                     
                     
Uses of Free Cash Flow                    
Investments:                    
  Acquisition of noncontrolling interest in subsidiary   $ -     $ (14 )    
  Non-maintenance capital expenditures (b)     (36 )     (25 )    
  Other investing activities, net (c)     (1 )     (10 )    
Total investments   $ (37 )   $ (49 )    
                     
Return of capital to stockholders:                    
  Cash dividends paid to stockholders   $ (22 )   $ -      
  Common stock repurchased     -       (24 )    
Total return of capital to stockholders   $ (22 )   $ (24 )    
                     
Capital raising activities:                    
  Net proceeds from issuance of corporate debt (d) (f)   $ 393     $ -      
  Other financing activities, net     7       (15 )    
Net proceeds from capital raising activities   $ 400     $ (15 )    
                     
Debt repayments:                    
  Net cash used for scheduled principal payments on corporate debt   $ -     $ (1 )    
  Net cash used for scheduled principal payments on project debt (e)     (7 )     (19 )    
  Optional repayment of corporate debt (f)     (95 )     -      
  Fees incurred for debt refinancing     (3 )     (1 )    
Total debt repayments   $ (105 )   $ (21 )    
                     
Borrowing activities - Revolving credit facility, net (f)   $ (110 )   $ 47      
                     
Effect of exchange rate changes on cash and cash equivalents   $ (1 )   $ -      
                     
Net change in cash and cash equivalents   $ 192     $ (35 )    
                     
                     
(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,
     
      2014     2013      
Maintenance capital expenditures   $ (36 )   $ (38 )    
Capital expenditures associated with organic growth investments and New York City contract(b)     (36 )     (25 )    
Total purchases of property, plant and equipment   $ (72 )   $ (63 )    
                       
(b) Growth investments includes investments in growth opportunities, including organic growth initiatives, technology, business development, and other similar expenditures.
                       
Capital expenditures associated with organic growth initiatives   $ (8 )   $ (25 )    
Capital expenditures associated with the New York City contract     (28 )     -      
Total Growth Investments and New York City contract   $ (36 )   $ (25 )    
                       
(c) Other investing activities is primarily comprised of net payments from the purchase/sale of investment securities.   
         
(d) Excludes borrowings under Revolving Credit Facility. Calculated as follows:
                       
Proceeds from borrowings on long-term debt (f)   $ 400     $ -      
Less: Financing costs related to issuance of long-term debt (f)     (7 )     -      
Net proceeds from issuance of corporate debt (f)   $ 393     $ -      
                       
(e) Calculated as follows:                    
                       
Total scheduled principal payments on project debt   $ (9 )   $ (16 )    
Decrease (increase) in related restricted funds held in trust     2       (3 )    
Net cash used for principal payments on project debt   $ (7 )   $ (19 )    
                       
                       
(f) During the first quarter of 2014, we completed the following financing transactions:
  -- We issued $400 million aggregate principal amount 5.875% senior notes due 2024. The proceeds of the Notes will be used for general corporate purposes including to repay, at maturity, the 3.25% Cash Convertible Notes due June 1, 2014.
  -- We completed amendments related to our credit facilities. The amendments raised the revolving credit facility maximum available credit by a $100 million to $1.0 billion and extended the maturity of the revolving credit facility by two additional years through March 2019, and reduced the interest rate on the term loan by 25 basis points.
  -- We made a voluntary prepayment on the term loan of $95 million, consisting of principal and accrued interest, reducing the outstanding principal to $200 million.
 
As a result of these transactions, we recognized a loss on extinguishment of debt of approximately $2 million, pre-tax, consisting of the write-off of deferred financing costs and discounts related to the pre-amended credit facilities. We incurred $10 million in costs related to these transactions which have been paid as of March 31, 2014.
 
 
 
Exhibit 8A
Covanta Holding Corporation
Supplemental Information on Operations (a)
(Unaudited, $ in millions)
    Three Months Ended March 31, 2014
    North America          
    EfW   Other     Total   Other     Consolidated
Revenue:                                  
Waste and Service:                                  
  Waste and Service   $ 221   $ 10     $ 231   $ -     $ 231
  Debt Service     6     -       6     -       6
  Other Revenues     1     2       3     1       4
Total Waste and Service     228     12       240     1       241
Recycled Metals:                                  
  Ferrous     14     1       15     -       15
  Non-Ferrous     6     -       6     -       6
Total Recycled Metals     20     1       21     -       21
Energy:                                  
  Energy Sales     83     18       101     9       110
  Capacity     8     2       10     -       10
Total Energy Revenue     91     20       111     9       120
Other Revenue     -     19       19     -       19
Total Revenue   $ 339   $ 52     $ 391   $ 10     $ 401
                                   
Operating Expenses:                                  
Plant Operating Expenses:                                  
  Plant Maintenance     80     3       83     1       84
  Other Plant Operating Expenses     153     37       190     8       198
Total Plant Operating Expenses     233     40       273     9       282
Other Operating Expenses     -     18       18     -       18
General and Administrative     -     21       21     -       21
Depreciation and Amortization     46     6       52     1       53
Net Interest Expense on Project Debt     3     -       3     -       3
Net Write-offs      9     -        9      -       9
Total Operating Expenses   $ 291   $ 85     $ 376   $ 10     $ 386
                                   
Operating Income (Loss)   $ 48   $ (33 )   $ 15   $ -     $ 15
Operating Income (Loss) excluding Net Write-offs:   $  57   $  (33 )   $  24   $  -     $  24
   
(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. 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
 
   
   
Exhibit 8B  
Covanta Holding Corporation  
Supplemental Information on Operations (a)  
(Unaudited, $ in millions)  
   
    Three Months Ended March 31, 2013  
    North America            
    EfW   Other     Total   Other     Consolidated  
Revenue:                                    
Waste and Service:                                    
  Waste and Service   $ 205   $ 12     $ 217   $ 1     $ 218  
  Debt Service     10     -       10     -       10  
  Other Revenues     1     1       2     -       2  
Total Waste and Service     216     13       229     1       230  
Recycled Metals:                                    
  Ferrous     12     -       12     -       12  
  Non-Ferrous     4     -       4     -       4  
Total Recycled Metals     16     -       16     -       16  
Energy:                                    
  Energy Sales     71     12       83     7       90  
  Capacity     10     2       12     -       12  
Total Energy Revenue     81     14       95     7       102  
Other Revenue     -     23       23     1       24  
Total Revenue   $ 313   $ 50     $ 363   $ 9     $ 372  
                                     
Operating Expenses:                                    
Plant Operating Expenses:                                    
  Plant Maintenance     87     1       88     -       88  
  Other Plant Operating Expenses     146     38       184     8       192  
Total Plant Operating Expenses     233     39       272     8       280  
Other Operating Expenses     -     16       16     1       17  
General and Administrative     -     20       20     1       21  
Depreciation and Amortization     46     6       52     1       53  
Net Interest Expense on Project Debt     3     -       3     -       3  
Net Write-offs     -     -       -     -       -  
Total Operating Expenses   $ 282   $ 81     $ 363   $ 11     $ 374  
                                     
Operating Income (Loss)   $ 31   $ (31 )   $ -   $ (2 )   $ (2 )
Operating Income (Loss) excluding Net Write-off   $ 31   $ (31 )   $ -   $ (2 )   $ (2 )
   
(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. 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
   
   
   
Exhibit 9
North America EfW
Revenue and Operating Income Changes - Q1 2013 to Q1 2014
(Unaudited, $ in millions)
 
                                   
      Same Store (a)     Contract Transitions (b)                
  Q1 2013   Price   %     Volume     %     Total     %     Service Fee     PPA     Transactions(c)   Total Changes     Q1 2014
Waste and Service:                                                                                
                                                                                 
  Waste and Service $ 205   $ 3   1.3 %   $ 8     4.0 %   $ 11     5.3 %   $ -     $ -     $ 4   $ 15     $ 221
  Debt Service   10                               -             (4 )     -       -     (4 )     6
  Other Revenues   1                               -             -       -       -     -       1
Total Waste and Service   216                               11     4.9  %     (4 )     -       4     12       228
                                                                                 
Recycled Metals:                                                                                
                                                                                 
  Ferrous   12     1   11.7 %     1     4.1 %     2     15.7 %     -       -       -     2       14
  Non-Ferrous   4     -   5.4 %     2     55.8 %     2     61.2 %     -       -       -     2       6
Total Recycled Metals   16     2   10.3 %     2     15.6 %     4     25.9 %     -       -       -     4       20
                                                                                 
Energy:                                                                                
  Energy Sales   71     6   8.1 %     (2 )   -2.1 %     4     6.0 %     -       5       2     11       83
  Capacity   10                               -     -0.1 %     -       (2 )     -     (2 )     8
Total Energy Revenue   81                               4     5.2 %     -       3       2     9       91
Other Revenue   -                               -     -100.0 %     -       -       -     -       -
Total Revenue $ 313                             $ 19     6.1 %   $ (4 )   $ 3     $ 7   $ 25     $ 339
                                                                                 
Operating Expenses:                                                                                
Plant Operating Expenses:                                                                            
                                                                                 
  Plant Maintenance $ 87                             $ (9 )   -10.2 %   $ -     $ -     $ 2   $ (7 )   $ 80
  Other Plant Operating Expenses   146                               4     2.8 %     -       -       3     8       153
                                                                                 
Total Plant Operating Expenses   233                               (5 )   -2.0 %     -       -       5     1       233
                                                                                 
Other Operating Expenses   -                               -             -       -       -     -       -
                                                                                 
General and Administrative   -                               -             -       -       -     -       -
                                                                                 
Depreciation and Amortization   46                               (1 )           -       -       1     -       46
                                                                                 
Net Interest Expense on Project Debt   3                               (1 )           -       -       -     (1 )     3
Total Operating Expenses $ 282                             $ (7 )         $ -     $ -     $ 6   $ -     $ 282
                                                                                 
Operating Income (Loss) $ 31                             $ 26           $ (4 )   $ 3     $ -   $ 26     $ 57
   
(a) Reflects the performance at each facility on a comparable period-over-period basis, excluding the impacts of transitions and transactions.
(b) Includes the impact of the expiration of: (1) long-term major waste and service contracts, most typically representing the transition to a new contract structure, and (2) long-term energy contracts.
(c) Includes the impacts of acquisitions, divestitures and the addition or loss of operating contracts.
   
Note: Excludes Net Write-offs
Note: Certain amounts may not total due to rounding
 
 
 
Exhibit 10  
NORTH AMERICA  
OPERATING METRICS (Unaudited)  
             
    Three Months Ended
March 31,
 
    2013     2014  
EfW Waste                
                 
Tons: (in millions)                
  Contracted     3.3       3.5  
  Internalized from Transfer Stations     0.1       0.2  
  Uncontracted     0.7       0.8  
Total Tons     4.1       4.5  
                 
Total Contracted Tons (EfW + Transfer Stations)     3.5       3.7  
  % of EfW tons     84 %     83 %
                 
Revenue per Ton:                
  Contracted   $ 49.74     $ 49.81  
  Internalized from Transfer Stations   $ 52.77     $ 51.08  
  Uncontracted   $ 49.98     $ 51.08  
Average Revenue per Ton   $ 49.88     $ 50.08  
                 
EfW Energy                
Energy Sales: (GWh)                
  Contracted     0.8       0.8  
  Hedged     0.2       0.3  
  Market     0.2       0.2  
Total Energy Sales     1.2       1.3  
                 
Market Sales by Geography:                
PJM East     0.1       0.1  
NEPOOL     -       0.1  
NYISO     -       -  
Other     -       0.1  
                 
Revenue per MWh:                
  Contracted   $ 64.87     $ 70.78  
  Hedged   $ 39.75     $ 41.57  
  Market   $ 41.07     $ 86.20  
Average Revenue per MWh   $ 58.17     $ 65.26  
                 
Metals                
Tons Sold: (in thousands)                
  Ferrous     70       77  
  Non-Ferrous     4       6  
                 
Revenue per Ton:                
  Ferrous   $ 179     $ 201  
  Non-Ferrous   $ 929     $ 963  
                 
EfW Plant Operating Expenses ($ in millions)                
Plant Operating Expenses - Gross   $ 251     $ 250  
  Less: Client Pass-Through Costs     (17 )     (15 )
  Less: REC Sales - Contra Expense     (1 )     (2 )
Plant Operating Expenses - Reported   $ 233     $ 233  
                 
Client Pass-Throughs as % of Gross Costs     6.8 %     6.1 %
                 
Note: Waste volume includes solid tons only. Metals and energy volume are presented net of client revenue sharing. Steam sales are converted to MWh equivalent at an assumed average rate of 11 klbs of steam / MWh. Uncontracted energy sales include sales under PPAs that are based on market prices.  
   
Note: Certain amounts may not total due to rounding  
   
 
 
Exhibit 11A
Covanta Holding Corporation
Supplemental Information on Operations (a)
(Unaudited, $ in millions)
 
    Three Months Ended June 30, 2013
    North America          
    EfW     Other     Total   Other     Consolidated
Revenue:                                    
Waste and Service:                                    
  Waste and Service   $ 233     $ 9     $ 242   $ -     $ 242
  Debt Service     10       -       10     -       10
  Other Revenues     4       1       5     -       5
Total Waste and Service     247       10       257     -       257
Recycled Metals:                                    
  Ferrous     13       -       13     -       13
  Non-Ferrous     4       -       4     -       4
Total Recycled Metals     17       -       17     -       17
Energy:                                    
  Energy Sales     73       11       84     7       91
  Capacity     9       3       12     -       12
Total Energy Revenue     82       14       96     7       103
Other Revenue     -       32       32     2       34
Total Revenue   $ 346     $ 56     $ 402   $ 9     $ 411
                                     
Operating Expenses:                                    
Plant Operating Expenses:                                    
  Plant Maintenance     57       6       63     1       64
  Other Plant Operating Expenses     144       34       178     8       186
Total Plant Operating Expenses     201       40       241     9       250
Other Operating Expenses     (8 )     32       24     1       25
General and Administrative     -       21       21     -       21
Depreciation and Amortization     46       6       52     -       52
Net Interest Expense on Project Debt     3       -       3     1       4
Net Write-offs     4       -       4     -       4
Total Operating Expenses   $ 246     $ 99     $ 345   $ 11     $ 356
                                     
Operating Income (Loss)   $ 100     $ (43 )   $ 57   $ (2 )   $ 55
                                     
  Plus: Net Write-offs     4       -       4     -       4
Operating income (loss) excluding Net Write-offs:   $ 104     $ (43 )   $ 61   $ (2 )   $ 59
                                     
(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. 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
 
 
 
Exhibit 11B
Covanta Holding Corporation
Supplemental Information on Operations (a)
(Unaudited, $ in millions)
 
    Three Months Ended September 30, 2013
    North America          
    EfW     Other     Total   Other     Consolidated
Revenue:                          
Waste and Service:                                    
  Waste and Service   $ 230     $ 13     $ 243   $ -     $ 243
  Debt Service     9       -       9     -       9
  Other Revenues     2       1       3     -       3
Total Waste and Service     241       14       255     -       255
Recycled Metals:                                    
  Ferrous     14       -       14     -       14
  Non-Ferrous     5       -       5     -       5
Total Recycled Metals     19       -       19     -       19
Energy:                                    
  Energy Sales     75       15       90     8       98
  Capacity     12       7       19     -       19
Total Energy Revenue     87       22       109     8       117
Other Revenue     -       34       34     -       34
Total Revenue   $ 347     $ 70     $ 417   $ 8     $ 425
                                     
Operating Expenses:                                    
Plant Operating Expenses:                                    
  Plant Maintenance     33       3       36     -       36
  Other Plant Operating Expenses     149       37       186     8       194
Total Plant Operating Expenses     182       40       222     8       230
Other Operating Expenses     (5 )     31       26     1       27
General and Administrative     -       20       20     -       20
Depreciation and Amortization     46       5       51     1       52
Net Interest Expense on Project Debt     3       -       3     -       3
Net Write-offs     9       3       12     -       12
Total Operating Expenses   $ 235     $ 99     $ 334   $ 10     $ 344
                                     
Operating Income (Loss)   $ 112     $ (29 )   $ 83   $ (2 )   $ 81
                                     
  Plus: Net Write-offs     9       3       12     -       12
Operating income (loss) excluding Net Write-offs:   $ 121     $ (26 )   $ 95   $ (2 )   $ 93
                                     
(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. 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
 
 
 
Exhibit 11C  
Covanta Holding Corporation  
Supplemental Information on Operations (a)  
(Unaudited, $ in millions)  
       
    Three Months Ended December 31, 2013  
    North America              
    EfW   Other     Total     Other     Consolidated  
Revenue:                                      
Waste and Service:                                      
  Waste and Service   $ 244   $ 11     $ 255     $ 1     $ 256  
  Debt Service     6     -       6       -       6  
  Other Revenues     2     2       4       -       4  
Total Waste and Service     252     13       265       1       266  
Recycled Metals:                                      
  Ferrous     16     -       16       -       16  
  Non-Ferrous     5     -       5       -       5  
Total Recycled Metals     21     -       21       -       21  
Energy:                                      
  Energy Sales     79     10       89       8       97  
  Capacity     9     3       12       -       12  
Total Energy Revenue     88     13       101       8       109  
Other Revenue     1     25       26       -       26  
Total Revenue   $ 362   $ 51     $ 413     $ 9     $ 422  
                                       
Operating Expenses:                                      
Plant Operating Expenses:                                      
  Plant Maintenance     41     4       45       1       46  
  Other Plant Operating Expenses     147     32       179       7       186  
Total Plant Operating Expenses     188     36       224       8       232  
Other Operating Expenses     -     26       26       2       28  
General and Administrative     -     19       19       1       20  
Depreciation and Amortization     47     6       53       -       53  
Net Interest Expense on Project Debt     2     -       2       1       3  
Net Gains     -     (1 )     (1 )     -       (1 )
Total Operating Expenses   $ 237   $ 86     $ 323     $ 12     $ 335  
                                       
Operating Income (Loss)   $ 125   $ (35 )   $ 90     $ (3 )   $ 87  
                                       
  Plus: Net Gains     -     (1 )     (1 )     -       (1 )
Operating income (loss) excluding Net Gains:   $ 125   $ (36 )   $ 89     $ (3 )   $ 86  
                                       
(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. 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
   
   
   
Exhibit 11D  
NORTH AMERICA  
OPERATING METRICS (Unaudited) - Summary of 2013 by Quarter  
   
    Three Months Ended     Twelve Months Ended  
    March 31, 2013     June 30, 2013     September 30, 2013     December 31, 2013     December 31, 2013  
EfW Waste                                        
  Tons: (in millions)                                        
  Contracted     3.3       3.7       3.8       3.7       14.5  
  Internalized from Transfer Stations     0.1       0.1       0.2       0.2       0.6  
  Uncontracted     0.7       0.8       0.9       0.8       3.2  
Total Tons     4.1       4.6       4.9       4.7       18.3  
                                         
Total Contracted Tons (EfW + Transfer Stations)     3.5       4.0       4.0       3.9       15.4  
  % of EfW tons     84 %     84 %     83 %     82 %     83 %
                                         
Revenue per Ton:                                        
  Contracted   $ 49.74     $ 48.05     $ 45.86     $ 51.50     $ 48.73  
  Internalized from Transfer Stations   $ 52.77     $ 52.66     $ 52.00     $ 53.78     $ 52.80  
  Uncontracted   $ 49.98     $ 53.92     $ 52.48     $ 54.15     $ 52.79  
Average Revenue per Ton   $ 49.88     $ 49.23     $ 47.24     $ 52.05     $ 49.57  
                                         
EfW Energy                                        
Energy Sales: (GWh)                                        
  Contracted     0.8       0.9       0.9       0.9       3.5  
  Hedged     0.2       0.2       0.2       0.3       0.9  
  Market     0.2       0.2       0.3       0.3       1.0  
Total Energy Sales     1.2       1.3       1.4       1.5       5.4  
                                         
Market Sales by Geography:                                        
PJM East     0.1       0.1       0.2       0.2       0.6  
NEPOOL     -       0.1       0.1       0.1       0.3  
NYISO     -       -       -       -       -  
Other     -       -       -       -       -  
                                         
Revenue per MWh:                                        
  Contracted   $ 64.87     $ 63.82     $ 63.42     $ 63.57     $ 63.92  
  Hedged   $ 39.75     $ 39.86     $ 38.60     $ 38.37     $ 39.01  
  Market   $ 41.07     $ 37.99     $ 41.88     $ 42.35     $ 40.88  
Average Revenue per MWh   $ 58.17     $ 55.97     $ 55.09     $ 55.07     $ 56.01  
                                         
Metals                                        
Tons Sold: (in thousands)                                        
  Ferrous     70       75       84       82       311  
  Non-Ferrous     4       5       5       6       20  
                                         
Revenue per Ton:                                        
  Ferrous   $ 179     $ 176     $ 172     $ 185     $ 178  
  Non-Ferrous   $ 929     $ 841     $ 876     $ 792     $ 852  
                                         
EfW Plant Operating Expenses ($ in millions)                                        
Plant Operating Expenses - Gross   $ 251     $ 221     $ 200     $ 210     $ 882  
  Less: Client Pass-Through Costs     (17 )     (18 )     (16 )     (20 )     (71 )
  Less: REC Sales - Contra Expense     (1 )     (2 )     (2 )     (2 )     (7 )
Plant Operating Expenses - Reported   $ 233     $ 201     $ 182     $ 188     $ 804  
                                         
Client Pass-Throughs as % of Gross Costs     6.8 %     8.1 %     7.9 %     9.6 %     8.0 %
                                         
Note: Waste volume includes solid tons only. Metals and energy volume are presented net of client revenue sharing. Steam sales are converted to MWh equivalent at an assumed average rate of 11 klbs of steam / MWh. Uncontracted energy sales include sales under PPAs that are based on market prices.
 
Note: Certain amounts may not total due to rounding
 
 

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 income, cash flow provided by operating activities or diluted income 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, 2014 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, 2014, 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 income. 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 for continuing operations, less the results of operations of our insurance subsidiaries. 

Under the credit facilities as of March 31, 2014, 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, 2014. 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, 2014 and 2013, reconciled for each such period to net income from continuing operations and cash flow provided by operating activities from continuing operations, 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 from continuing operations, 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, 2014 and 2013, reconciled for each such period to cash flow provided by operating activities from continuing operations, 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, 2014 and 2013, reconciled for each such period to diluted income per share from continuing operations, 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:

  • seasonal or long-term fluctuations in the prices of energy, waste disposal, scrap metal and commodities, and our ability to renew or replace expiring contracts at comparable pricing;
  • adoption of new laws and regulations in the United States and abroad, including energy laws, environmental laws, labor laws and healthcare laws;
  • 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;
  • our ability to utilize net operating loss carryforwards;
  • limits of insurance coverage;
  • our ability to avoid defaults under our long-term contracts;
  • performance of third parties under our contracts 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;
  • the scalability of our business;
  • 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
  • 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, 2013 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