Date: October 30, 2006
Source: Covanta Holding Corporation
Diluted Earnings Per Share of $0.21
-- Adjusted EBITDA of $147 million at Covanta Energy
-- Company Reaffirms Full Year 2006 Guidance
Covanta Holding Corporation (NYSE: CVA) reported financial results today for the three and nine months ended September 30, 2006. The Company is presenting comparative financial results on an as reported basis for the third quarter and a pro forma basis for the year-to-date. The pro forma information was prepared as if the acquisition of Covanta ARC Holdings Inc. was consummated on January 1, 2005. The Company believes that such presentation will assist in assessing Covanta's performance.
Third Quarter Results
For the three months ended September 30, 2006, total operating revenues were $311 million versus $301 million in the prior year. Net income was $31 million, or $0.21 per diluted share which compares with 2005 third quarter net income of $37 million, or $0.26 per diluted share. The results for the three months ended September 30, 2005 included an after-tax unrealized gain of $6.8 million or $0.05 per diluted share associated with the warrants received as part of the reorganization of a former subsidiary.
On higher revenue and solid operating performance at Covanta Energy Corporation ("Covanta Energy"), the Company's principal subsidiary, adjusted EBITDA grew 2% to $147 million. Covanta Energy's domestic waste and energy operating revenues grew 5% to $280 million driven primarily by higher energy rates, contractual service fee escalation and favorable scrap metal pricing. International revenues of $28 million decreased approximately $4 million compared to the prior year primarily due to the sale of a small facility in China during the second quarter of 2006.
YTD 2006 As Reported Results versus YTD 2005 Pro Forma Results
For the nine months ended September 30, 2006, total operating revenues rose 5% to $951 million while net income was $94 million. Diluted earnings per share increased 64% to $0.64 driven primarily by strong operating performance and a lower effective tax rate. Covanta Energy's adjusted EBITDA grew 13% to $424 million resulting from higher revenues, strong operating performance and the successful execution of cost reduction initiatives.
"We are very pleased with our continued strong operating performance", said Anthony Orlando, President and Chief Executive Officer. "Covanta's relentless focus on client service and operational excellence throughout the organization underpins our commitment to drive long-term shareowner value. Indicative of the outstanding service Covanta provides, our Lancaster County Pennsylvania client recently awarded us a Service Agreement extension," Mr. Orlando continued. "That is a credit to our dedicated employees and it buoys my optimism that Covanta's demonstrated operational expertise will enable us to capitalize on strategic opportunities to expand our business domestically and abroad."
2006 Guidance Reaffirmed
The Company is reaffirming its full year 2006 guidance on the following key metrics:
Covanta Energy adjusted EBITDA in the range of $535 to $545 million,
-- Covanta Energy free cash flow of approximately $235 million, and
-- Diluted earnings per share of approximately $0.75.
Conference Call Information
Covanta will host a conference call at 8:30 am (Eastern) on Tuesday, October 31, 2006 to discuss its results for the three and nine months ended September 30, 2006. Prepared remarks will be followed by a question-and-answer session. To participate, please dial
(800) 946-0783 approximately 10 minutes prior to the scheduled start of the call. If you are calling from outside of the United States, please dial (719) 457-2658. The conference call will also be web cast live on the Investor Relations section of the Covanta website at www.covantaholding.com.
A replay of the conference call will be available from 11:00 am (Eastern) on Tuesday, October 31, 2006 through midnight (Eastern) Tuesday, November 7, 2006. To access the replay, please dial (888) 203-1112 or (719) 457-0820 and use the replay pass code: 3089448. The web cast will also be archived on www.covantaholding.com.
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