EBITDA Drops $15 million to $124 million : Covanta Q3: EfW Revenues Offset by Lower Metal Recycling Incomes
Third quarter revenues at New Jersey based waste to energy firm, Covanta Holding Corporation (NYSE: CVA), decreased by $1 million to $421 million from $422 million compared to the previous year on the back of reduced revenues from recycled metals.
The company explained that an increase in waste and service revenue was offset by decreases in metals and energy revenue. However, ‘same store’ North America waste to energy revenue increased by $6 million as follows:
Waste and service revenue increased by $8 million, driven by price and volume improvements of $6 million and $2 million, respectively
Energy revenue increased by $1 million, with higher prices and capacity revenue offsetting lower production volume
Recycled metals revenue decreased by $3 million, primarily driven by lower market prices.
Within North America EfW (Energy from Waste) revenue, contract transitions were said to have resulted in an increase of $4 million due to additional energy revenue sharing partially offset by the expiration of an above-market power purchase agreement.
All other revenue (non-EfW operations) decreased by $15 million on a consolidated basis.
Energy revenue from non-EfW operations decreased by $22 million, representing the contribution from biomass facilities and China operations in the prior year. This was said to have been partially offset by a $6 million increase in waste and service revenue primarily from newly acquired environmental solutions businesses.
Operating expense increased by $13 million to $361 million. The year-over-year increase was primarily attributed to:
An $11 million increase in North America EfW plant operating expense driven by the Durham-York facility coming online and same store cost escalation
An $8 million increase in North America segment non-EfW plant operating expense, primarily related to operations in our newly acquired environmental solutions businesses and higher accruals for employee incentive compensation, partially offset by shutting down remaining biomass facilities
A $7 million decrease in plant operating expense outside the North America segment due to the exchange of ownership interests in EfW facilities located in China.
Adjusted EBITDA declined by $15 million on a year-over-year basis to $124 million, driven primarily by the China transaction and increased accrual for employee incentive compensation.
“Our waste business continues to grow, benefiting from strong market conditions and demand for our environmental solutions offerings," commented Stephen J. Jones, Covanta's president and CEO.
"Overall, operating performance is on track with the plan we laid out in the beginning of the year,” he continued. |In addition, construction of the Dublin EfW facility is now over 75% complete, and this quarter we signed the remaining waste supply contracts to secure 90% of the facility’s capacity. We look forward to moving into commercial operations by the end of Q3 2017.”
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