þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-6021257
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification Number)
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445 South Street, Morristown, NJ
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07960
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(Address of Principal Executive Office)
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(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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(Do not check if a smaller reporting company)
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Class
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Outstanding at July 21, 2017
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Common Stock, $0.10 par value
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131,024,826
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Page
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OTHER
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2017
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2016
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2017
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2016
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||||||||
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(Unaudited)
(In millions, except per share amounts) |
||||||||||||||
OPERATING REVENUE:
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||||||||
Waste and service revenue
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$
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310
|
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$
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297
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$
|
596
|
|
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$
|
576
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Energy revenue
|
75
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|
86
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161
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187
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Recycled metals revenue
|
15
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17
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31
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30
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Other operating revenue
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24
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18
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|
40
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28
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|
||||
Total operating revenue
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424
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|
418
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|
|
828
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|
821
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OPERATING EXPENSE:
|
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||||||||
Plant operating expense
|
319
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|
314
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|
651
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|
|
629
|
|
||||
Other operating expense
|
2
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|
|
19
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|
|
17
|
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|
31
|
|
||||
General and administrative expense
|
30
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|
25
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|
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58
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|
48
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|
||||
Depreciation and amortization expense
|
52
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|
|
51
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|
|
104
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|
103
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|
||||
Impairment charges
|
1
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|
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4
|
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|
1
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19
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|
||||
Total operating expense
|
404
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|
413
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|
831
|
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830
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||||
Operating income (loss)
|
20
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|
|
5
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(3
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)
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(9
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)
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||||
Other expense:
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Interest expense, net
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(35
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)
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(34
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)
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(71
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)
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(68
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)
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||||
Loss on asset sales
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(2
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)
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—
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(6
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)
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—
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|
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Loss on extinguishment of debt
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(13
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)
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—
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(13
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)
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—
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Other income (expense), net
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—
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2
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—
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—
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Total other expense
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(50
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)
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(32
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)
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(90
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)
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(68
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)
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Loss before income tax (expense) benefit and equity in net income from unconsolidated investments
|
(30
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)
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(27
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)
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(93
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)
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(77
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)
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Income tax (expense) benefit
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(8
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)
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(3
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)
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3
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|
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7
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|
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Equity in net income from unconsolidated investments
|
1
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1
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|
|
1
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4
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NET LOSS ATTRIBUTABLE TO COVANTA HOLDING CORPORATION
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$
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(37
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)
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$
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(29
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)
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$
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(89
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)
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$
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(66
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)
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Weighted Average Common Shares Outstanding:
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Basic
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130
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129
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129
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129
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Diluted
|
130
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129
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129
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129
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Loss Per Share Attributable to Covanta Holding Corporation Stockholders:
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Basic
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$
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(0.28
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)
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$
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(0.23
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)
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$
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(0.69
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)
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$
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(0.51
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)
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Diluted
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$
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(0.28
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)
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$
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(0.23
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)
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$
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(0.69
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)
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$
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(0.51
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)
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Cash Dividend Declared Per Share:
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$
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0.25
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$
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0.25
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$
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0.50
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$
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0.50
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2017
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2016
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2017
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2016
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(Unaudited, in millions)
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||||||||||||||
Net loss attributable to Covanta Holding Corporation
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$
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(37
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)
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$
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(29
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)
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$
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(89
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)
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$
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(66
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)
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Foreign currency translation
|
9
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|
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(3
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)
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12
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6
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Net unrealized gain (loss) on derivative instruments, net of tax expense of $1, ($5), $1 and ($5), respectively
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3
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(13
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)
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3
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(20
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)
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Other comprehensive income (loss) attributable to Covanta Holding Corporation
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12
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(16
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)
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15
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(14
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)
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Comprehensive loss attributable to Covanta Holding Corporation
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$
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(25
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)
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$
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(45
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)
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$
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(74
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)
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$
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(80
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)
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Six Months Ended June 30,
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||||||
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2017
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2016
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||||
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(Unaudited, in millions)
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||||||
OPERATING ACTIVITIES:
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Net loss
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$
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(89
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)
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$
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(66
|
)
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Adjustments to reconcile net loss to net cash provided by operating activities:
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Depreciation and amortization expense
|
104
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|
103
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Amortization of long-term debt deferred financing costs
|
3
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|
|
4
|
|
||
Loss on asset sales
|
6
|
|
|
—
|
|
||
Impairment charges
|
1
|
|
|
19
|
|
||
Loss on extinguishment of debt
|
13
|
|
|
—
|
|
||
Provision for doubtful accounts
|
3
|
|
|
—
|
|
||
Stock-based compensation expense
|
11
|
|
|
9
|
|
||
Equity in net income from unconsolidated investments
|
(1
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)
|
|
(4
|
)
|
||
Dividends from unconsolidated investments
|
—
|
|
|
1
|
|
||
Deferred income taxes
|
(6
|
)
|
|
(8
|
)
|
||
Other, net
|
(3
|
)
|
|
1
|
|
||
Change in restricted funds held in trust
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(1
|
)
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|
3
|
|
||
Change in working capital, net of effects of acquisitions
|
(15
|
)
|
|
—
|
|
||
Net cash provided by operating activities
|
26
|
|
|
62
|
|
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INVESTING ACTIVITIES:
|
|
|
|
||||
Purchase of property, plant and equipment
|
(152
|
)
|
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(184
|
)
|
||
Acquisition of businesses, net of cash acquired
|
(16
|
)
|
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(9
|
)
|
||
Property insurance proceeds
|
5
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|
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—
|
|
||
Other, net
|
(3
|
)
|
|
2
|
|
||
Net cash used in investing activities
|
(166
|
)
|
|
(191
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from borrowings on long-term debt
|
400
|
|
|
—
|
|
||
Proceeds from borrowings on revolving credit facility
|
633
|
|
|
515
|
|
||
Proceeds from borrowings on Dublin project financing
|
60
|
|
|
77
|
|
||
Payments of borrowings on revolving credit facility
|
(501
|
)
|
|
(370
|
)
|
||
Payments on long-term debt
|
(412
|
)
|
|
(1
|
)
|
||
Payments on equipment financing capital leases
|
(2
|
)
|
|
(2
|
)
|
||
Payments on project debt
|
(12
|
)
|
|
(9
|
)
|
||
Payments of deferred financing costs
|
(9
|
)
|
|
(3
|
)
|
||
Cash dividends paid to stockholders
|
(65
|
)
|
|
(65
|
)
|
||
Change in restricted funds held in trust
|
5
|
|
|
18
|
|
||
Common stock repurchased
|
—
|
|
|
(20
|
)
|
||
Other, net
|
4
|
|
|
(1
|
)
|
||
Net cash provided by financing activities
|
101
|
|
|
139
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
3
|
|
|
2
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(36
|
)
|
|
12
|
|
||
Cash and cash equivalents at beginning of period
|
84
|
|
|
96
|
|
||
Cash and cash equivalents at end of period
|
$
|
48
|
|
|
$
|
108
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Basic weighted average common shares outstanding
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
Dilutive effect of stock options, restricted stock and restricted stock units
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Diluted weighted average common shares outstanding
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Stock options
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Restricted stock
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Restricted stock units
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
Foreign Currency Translation
|
|
Pension and Other Postretirement Plan Unrecognized Net Gain
|
|
Net Unrealized (Loss) Gain on Derivatives
|
|
Total
|
||||||||
Balance at December 31, 2015
|
$
|
(34
|
)
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
$
|
(34
|
)
|
Other comprehensive income (loss) before reclassifications
|
6
|
|
|
—
|
|
|
(20
|
)
|
|
(14
|
)
|
||||
Net current period comprehensive income (loss)
|
6
|
|
|
—
|
|
|
(20
|
)
|
|
(14
|
)
|
||||
Balance at June 30, 2016
|
$
|
(28
|
)
|
|
$
|
2
|
|
|
$
|
(22
|
)
|
|
$
|
(48
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2016
|
$
|
(41
|
)
|
|
$
|
2
|
|
|
$
|
(23
|
)
|
|
$
|
(62
|
)
|
Other comprehensive income before reclassifications
|
12
|
|
|
—
|
|
|
3
|
|
|
15
|
|
||||
Net current period comprehensive income
|
12
|
|
|
—
|
|
|
3
|
|
|
15
|
|
||||
Balance at June 30, 2017
|
$
|
(29
|
)
|
|
$
|
2
|
|
|
$
|
(20
|
)
|
|
$
|
(47
|
)
|
|
North America
|
|
All Other
(1)
|
|
Total
|
||||||
Three Months Ended June 30, 2017
|
|
|
|
|
|
||||||
Operating revenue
|
$
|
424
|
|
|
$
|
—
|
|
|
$
|
424
|
|
Depreciation and amortization expense
|
52
|
|
|
—
|
|
|
52
|
|
|||
Impairment charges
|
1
|
|
|
—
|
|
|
1
|
|
|||
Operating income (loss)
|
22
|
|
|
(2
|
)
|
|
20
|
|
|||
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2016
|
|
|
|
|
|
||||||
Operating revenue
|
$
|
418
|
|
|
$
|
—
|
|
|
$
|
418
|
|
Depreciation and amortization expense
|
51
|
|
|
—
|
|
|
51
|
|
|||
Impairment charges
|
4
|
|
|
—
|
|
|
4
|
|
|||
Operating income (loss)
|
7
|
|
|
(2
|
)
|
|
5
|
|
|||
|
North America
|
|
All Other
(1)
|
|
Total
|
||||||
Six Months Ended June 30, 2017
|
|
|
|
|
|
||||||
Operating revenue
|
$
|
828
|
|
|
$
|
—
|
|
|
$
|
828
|
|
Depreciation and amortization expense
|
104
|
|
|
—
|
|
|
104
|
|
|||
Impairment charges
|
1
|
|
|
—
|
|
|
1
|
|
|||
Operating income (loss)
|
1
|
|
|
(4
|
)
|
|
(3
|
)
|
|||
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2016
|
|
|
|
|
|
||||||
Operating revenue
|
$
|
814
|
|
|
$
|
7
|
|
|
$
|
821
|
|
Depreciation and amortization expense
|
103
|
|
|
—
|
|
|
103
|
|
|||
Impairment charges
|
19
|
|
|
—
|
|
|
19
|
|
|||
Operating loss
|
(7
|
)
|
|
(2
|
)
|
|
(9
|
)
|
(1)
|
All other is comprised of the financial results of our operations outside of North America.
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
LONG-TERM DEBT:
|
|
|
|
||||||
Revolving credit facility (3.42% - 3.67%)
|
$
|
475
|
|
|
$
|
343
|
|
||
Term loan, net (2.87%)
|
194
|
|
|
195
|
|
||||
Credit Facilities Sub-total
|
$
|
669
|
|
|
$
|
538
|
|
||
7.25% Senior notes due 2020
|
$
|
—
|
|
|
$
|
400
|
|
||
6.375% Senior notes due 2022
|
400
|
|
|
400
|
|
||||
5.875% Senior notes due 2024
|
400
|
|
|
400
|
|
||||
5.875% Senior notes due 2025
|
400
|
|
|
—
|
|
||||
Less: deferred financing costs related to senior notes
|
(17
|
)
|
|
(14
|
)
|
||||
Senior Notes Sub-total
|
$
|
1,183
|
|
|
$
|
1,186
|
|
||
4.00% - 5.25% Tax-exempt bonds due 2024 through 2045
|
$
|
464
|
|
|
$
|
464
|
|
||
Less: deferred financing costs related to tax-exempt bonds
|
(5
|
)
|
|
(5
|
)
|
||||
Tax-Exempt Bonds Sub-total
|
$
|
459
|
|
|
$
|
459
|
|
||
3.48% - 4.52% Equipment financing capital leases due 2024 through 2027
|
67
|
|
|
69
|
|
||||
Total long-term debt
|
$
|
2,378
|
|
|
$
|
2,252
|
|
||
Less: current portion
|
(10
|
)
|
|
(9
|
)
|
||||
Noncurrent long-term debt
|
$
|
2,368
|
|
|
$
|
2,243
|
|
||
PROJECT DEBT:
|
|
|
|
||||||
North America project debt:
|
|
|
|
||||||
4.00% - 5.00% project debt related to service fee structures due 2017 through 2035
|
$
|
68
|
|
|
$
|
78
|
|
||
5.00% Union capital lease due 2017 through 2053
|
97
|
|
|
99
|
|
||||
5.25% - 6.20% project debt related to tip fee structures due 2017 through 2020
|
16
|
|
|
16
|
|
||||
Unamortized debt premium, net
|
4
|
|
|
4
|
|
||||
Less: deferred financing costs related to North America project debt
|
(1
|
)
|
|
(1
|
)
|
||||
Total North America project debt
|
$
|
184
|
|
|
$
|
196
|
|
||
Other project debt:
|
|
|
|
||||||
Dublin senior loan due 2021 (5.72% - 6.41%)
|
(1)
|
|
$
|
235
|
|
|
$
|
155
|
|
Debt discount related to Dublin senior loan
|
(5
|
)
|
|
(6
|
)
|
||||
Less: deferred financing cost related to Dublin senior loan
|
(19
|
)
|
|
(18
|
)
|
||||
Dublin senior loan, net
|
$
|
211
|
|
|
$
|
131
|
|
||
Dublin junior loan due 2022 (9.23% - 9.73%)
|
$
|
64
|
|
|
$
|
58
|
|
||
Debt discount related to Dublin junior loan
|
—
|
|
|
(1
|
)
|
||||
Less: deferred financing costs related to Dublin junior loan
|
(1
|
)
|
|
(1
|
)
|
||||
Dublin junior loan, net
|
$
|
63
|
|
|
$
|
56
|
|
||
Total other project debt, net
|
$
|
274
|
|
|
$
|
187
|
|
||
Total project debt
|
$
|
458
|
|
|
$
|
383
|
|
||
Less: Current portion
|
(22
|
)
|
|
(22
|
)
|
||||
Noncurrent project debt
|
$
|
436
|
|
|
$
|
361
|
|
||
TOTAL CONSOLIDATED DEBT
|
$
|
2,836
|
|
|
$
|
2,635
|
|
||
Less: Current debt
|
(32
|
)
|
|
(31
|
)
|
||||
TOTAL NONCURRENT CONSOLIDATED DEBT
|
$
|
2,804
|
|
|
$
|
2,604
|
|
|
Total
|
|
|
|
Direct Borrowings as of
|
|
Outstanding Letters of Credit as of
|
|
Unused Capacity as of
|
||||||||
|
Credit Facility
|
|
Expiring
(1)
|
|
June 30, 2017
|
|
June 30, 2017
|
|
June 30, 2017
|
||||||||
Revolving Credit Facility
|
$
|
1,000
|
|
|
2020
|
|
$
|
475
|
|
|
$
|
190
|
|
|
$
|
335
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Capitalized interest
|
$
|
12
|
|
|
$
|
7
|
|
|
$
|
20
|
|
|
$
|
13
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Pass through costs
|
$
|
13
|
|
|
$
|
9
|
|
|
$
|
23
|
|
|
$
|
19
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Insurance recoveries for property costs, net of impairment charges
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
Insurance recoveries for business interruption and clean-up costs, net of costs incurred
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Share based compensation expense
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
11
|
|
|
$
|
9
|
|
|
As of June 30, 2017
|
||
|
Unrecognized stock-
based compensation
|
|
Weighted-average years
to be recognized
|
Restricted stock awards
|
$ 14
|
|
1.6
|
Restricted stock units
|
$ 13
|
|
2.1
|
•
|
For cash and cash equivalents, restricted funds, marketable securities and accounts receivable, the carrying value of these amounts is a reasonable estimate of their fair value. The fair value of restricted funds held in trust is based on quoted market prices of the investments held by the trustee.
|
•
|
Fair values for long-term debt and project debt are determined using quoted market prices (Level 1).
|
•
|
The fair value for interest rate swaps was determined by obtaining quotes from two counterparties (one is a holder of the long position and the other is in the short) and extrapolating those across the long and short notional amounts. The fair value of the interest rate swaps was adjusted to reflect counterparty risk of non-performance, and was based on the counterparty’s credit spread in the credit derivatives market.
|
•
|
The fair values of our energy hedges were determined using the spread between our fixed price and the forward curve information available within the market.
|
•
|
The fair value of our foreign currency hedge was determined by obtaining quotes from two counterparties and is based on market accepted option pricing methodology which utilizes inputs such as the currency spot rate as of the balance sheet date, the strike price of the options and volatility.
|
Financial Instruments Recorded at Fair Value on a Recurring Basis:
|
|
Fair Value Measurement Level
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
(In millions)
|
||||||
Assets:
|
|
|
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
|
|
|
||||
Bank deposits and certificates of deposit
|
|
1
|
|
$
|
44
|
|
|
$
|
79
|
|
Money market funds
|
|
1
|
|
4
|
|
|
5
|
|
||
Total cash and cash equivalents:
|
|
|
|
48
|
|
|
84
|
|
||
Restricted funds held in trust:
|
|
|
|
|
|
|
||||
Bank deposits and certificates of deposit
|
|
1
|
|
17
|
|
|
12
|
|
||
Money market funds
|
|
1
|
|
30
|
|
|
36
|
|
||
U.S. Treasury/Agency obligations
(1)
|
|
1
|
|
10
|
|
|
14
|
|
||
State and municipal obligations
|
|
1
|
|
36
|
|
|
46
|
|
||
Commercial paper/Guaranteed investment contracts/Repurchase agreements
|
|
1
|
|
12
|
|
|
2
|
|
||
Total restricted funds held in trust:
|
|
|
|
105
|
|
|
110
|
|
||
Investments — mutual and bond funds
(2)
|
|
1
|
|
2
|
|
|
2
|
|
||
Derivative asset — energy hedges
(3)
|
|
2
|
|
4
|
|
|
3
|
|
||
Total assets:
|
|
|
|
$
|
159
|
|
|
$
|
199
|
|
Liabilities:
|
|
|
|
|
|
|
||||
Derivative liability — energy hedges
(4)
|
|
2
|
|
$
|
—
|
|
|
$
|
1
|
|
Derivative liability — interest rate swaps
(4), (5)
|
|
2
|
|
$
|
18
|
|
|
$
|
20
|
|
Total liabilities:
|
|
|
|
$
|
18
|
|
|
$
|
21
|
|
|
|
As of June 30, 2017
|
|
As of December 31, 2016
|
||||||||||||
Financial Instruments Recorded at Carrying Amount:
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
(6)
|
|
$
|
303
|
|
|
$
|
303
|
|
|
$
|
333
|
|
|
$
|
333
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
$
|
2,378
|
|
|
$
|
2,375
|
|
|
$
|
2,252
|
|
|
$
|
2,237
|
|
Project debt
|
|
$
|
458
|
|
|
$
|
464
|
|
|
$
|
383
|
|
|
$
|
387
|
|
(1)
|
The U.S. Treasury/Agency obligations in restricted funds held in trust are primarily comprised of Federal Home Loan Mortgage Corporation securities at fair value.
|
(2)
|
Included in other noncurrent assets in the condensed consolidated balance sheets.
|
(3)
|
Included in prepaid expenses and other current assets in the condensed consolidated balance sheets.
|
(4)
|
Included in accrued expenses and other current liabilities in the condensed consolidated balance sheets.
|
(5)
|
Included in other noncurrent liabilities in the condensed consolidated balance sheets.
|
(6)
|
Includes
$1 million
of noncurrent receivables recorded in "Other assets" in the condensed consolidated balance sheets as
June 30, 2017
and
December 31, 2016
.
|
|
|
|
|
Amount of Gain or (Loss) Recognized In Income on Derivatives
|
||||||||||||||
Effect on Income of Derivative Instruments Not Designated As Hedging Instruments
|
|
Location of Gain or (Loss)
Recognized in Income on
Derivatives
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Foreign currency
|
|
Other income (expense), net
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
Effect on income of derivative instruments not designated as hedging instruments
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
Calendar Year
|
|
Hedged MWh
|
2017
|
|
1.4
|
2018
|
|
2.6
|
2019
|
|
0.1
|
Total
|
|
4.1
|
|
|
Commitments Expiring by Period
|
||||||||||
|
|
Total
|
|
Less Than
One Year
|
|
More Than
One Year
|
||||||
Letters of credit issued under the Revolving Credit Facility
|
|
$
|
190
|
|
|
$
|
—
|
|
|
$
|
190
|
|
Letters of credit - other
|
|
67
|
|
|
—
|
|
|
67
|
|
|||
Surety bonds
|
|
168
|
|
|
—
|
|
|
168
|
|
|||
Total other commitments — net
|
|
$
|
425
|
|
|
$
|
—
|
|
|
$
|
425
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Costs related to defined contribution plans
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
|
June 30, 2017
|
|
June 30, 2016
|
||||
Consumer Price Index
(1)
|
|
1.6
|
%
|
|
1.0
|
%
|
||
PJM Pricing (Electricity)
(2)
|
|
$
|
27.73
|
|
|
$
|
22.64
|
|
NE ISO Pricing (Electricity)
(3)
|
|
$
|
27.34
|
|
|
$
|
23.49
|
|
Henry Hub Pricing (Natural Gas)
(4)
|
|
$
|
3.08
|
|
|
$
|
2.14
|
|
#1 HMS Pricing (Ferrous Metals)
(5)
|
|
$
|
263
|
|
|
$
|
220
|
|
Scrap Metals - Old Sheet & Old Cast
(6)
|
|
$
|
0.63
|
|
|
$
|
0.58
|
|
(1)
|
Represents the year-over-year percent change in the Headline CPI number. The Consumer Price Index (CPI-U) data is provided by the U.S. Department of Labor Bureau of Labor Statistics.
|
(2)
|
Average price per MWh for
Q2 2017
and
Q2 2016
. Pricing for the PJM PSEG Zone is provided by the PJM ISO.
|
(3)
|
Average price per MWh for
Q2 2017
and
Q2 2016
. Pricing for the Mass Hub Zone is provided by the NE ISO.
|
(4)
|
Average price per MMBtu for
Q2 2017
and
Q2 2016
. The Henry Hub Pricing data is provided by the Natural Gas Weekly Update, U.S. Energy Information Administration.
|
(5)
|
Average price per gross ton for
Q2 2017
and
Q2 2016
. The #1 Heavy Melt Steel ("HMS") composite index ($/gross ton) price as published by American Metal Market.
|
(6)
|
Average price per pound for
Q2 2017
and
Q2 2016
. Calculated using the high price of Old Cast Aluminum Scrap ($/lb) as published by American Metal Market.
|
•
|
$66 million
declared in dividends to stockholders; and
|
•
|
$95 million
for growth investments including
$56 million
towards construction of the Dublin EfW facility, $17 million to acquire three environmental services businesses and
$20 million
for various organic growth investments, which include metals recovery projects, investments related to our profiled waste and environmental services businesses, and continuous improvement projects.
|
•
|
“Organic growth”: reflects the performance of the business on a comparable period-over-period basis, excluding the impacts of transactions and contract transitions.
|
•
|
“Transactions”: includes the impacts of acquisitions, divestitures, and the addition or loss of operating contracts.
|
•
|
Contract “transitions”: includes the impact of the expiration of: (a) long-term major waste and service contracts, most typically representing the transition to a new contract structure, and (b) long-term energy contracts.
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated:
|
Three Months Ended June 30,
|
|
Variance
Increase (Decrease) |
||||||||
|
2017
|
|
2016
|
|
2017 vs 2016
|
||||||
|
(In millions)
|
||||||||||
OPERATING REVENUE:
|
|
|
|
|
|
||||||
Waste and service revenue
|
$
|
310
|
|
|
$
|
297
|
|
|
$
|
12
|
|
Energy revenue
|
75
|
|
|
86
|
|
|
(11
|
)
|
|||
Recycled metals revenue
|
15
|
|
|
17
|
|
|
(2
|
)
|
|||
Other operating revenue
|
24
|
|
|
18
|
|
|
6
|
|
|||
Total operating revenue
|
424
|
|
|
418
|
|
|
6
|
|
|||
OPERATING EXPENSE:
|
|
|
|
|
|
||||||
Plant operating expense
|
319
|
|
|
314
|
|
|
5
|
|
|||
Other operating expense
|
2
|
|
|
19
|
|
|
(17
|
)
|
|||
General and administrative expense
|
30
|
|
|
25
|
|
|
5
|
|
|||
Depreciation and amortization expense
|
52
|
|
|
51
|
|
|
1
|
|
|||
Impairment charges
|
1
|
|
|
4
|
|
|
(3
|
)
|
|||
Total operating expense
|
404
|
|
|
413
|
|
|
(8
|
)
|
|||
Operating income
|
$
|
20
|
|
|
$
|
5
|
|
|
$
|
14
|
|
Consolidated:
|
Six Months Ended June 30,
|
|
Variance
Increase (Decrease) |
||||||||
|
2017
|
|
2016
|
|
2017 vs 2016
|
||||||
|
(In millions)
|
||||||||||
OPERATING REVENUE:
|
|
|
|
|
|
||||||
Waste and service revenue
|
$
|
596
|
|
|
$
|
576
|
|
|
$
|
20
|
|
Energy revenue
|
161
|
|
|
187
|
|
|
(26
|
)
|
|||
Recycled metals revenue
|
31
|
|
|
30
|
|
|
1
|
|
|||
Other operating revenue
|
40
|
|
|
28
|
|
|
12
|
|
|||
Total operating revenue
|
828
|
|
|
821
|
|
|
7
|
|
|||
OPERATING EXPENSE:
|
|
|
|
|
|
||||||
Plant operating expense
|
651
|
|
|
629
|
|
|
22
|
|
|||
Other operating expense
|
17
|
|
|
31
|
|
|
(14
|
)
|
|||
General and administrative expense
|
58
|
|
|
48
|
|
|
10
|
|
|||
Depreciation and amortization expense
|
104
|
|
|
103
|
|
|
1
|
|
|||
Impairment charges
|
1
|
|
|
19
|
|
|
(18
|
)
|
|||
Total operating expense
|
831
|
|
|
830
|
|
|
1
|
|
|||
Operating loss
|
$
|
(3
|
)
|
|
$
|
(9
|
)
|
|
$
|
6
|
|
Consolidated (in millions):
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Variance
Increase (Decrease) |
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Three Month
|
|
Six Month
|
||||||||||||
EfW waste processing & handling
|
$
|
242
|
|
|
$
|
238
|
|
|
$
|
473
|
|
|
$
|
465
|
|
|
$
|
4
|
|
|
$
|
8
|
|
Environmental services
|
30
|
|
|
25
|
|
|
58
|
|
|
46
|
|
|
$
|
5
|
|
|
12
|
|
|||||
Municipal services
|
52
|
|
|
49
|
|
|
96
|
|
|
92
|
|
|
$
|
3
|
|
|
4
|
|
|||||
Other revenue
|
10
|
|
|
9
|
|
|
18
|
|
|
18
|
|
|
$
|
1
|
|
|
—
|
|
|||||
Intercompany
|
(25
|
)
|
|
(24
|
)
|
|
(48
|
)
|
|
(45
|
)
|
|
$
|
(1
|
)
|
|
(3
|
)
|
|||||
Total waste and service revenue
|
$
|
310
|
|
|
$
|
297
|
|
|
$
|
596
|
|
|
$
|
576
|
|
|
$
|
12
|
|
|
20
|
|
North America segment - EfW facilities - Tons
(1)
(in millions):
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Variance
Increase (Decrease) |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Three Month
|
|
Six Month
|
||||||
Contracted
|
4.3
|
|
|
4.4
|
|
|
8.3
|
|
|
8.5
|
|
|
(0.1
|
)
|
|
(0.2
|
)
|
Uncontracted
|
0.5
|
|
|
0.5
|
|
|
1.0
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
Total tons
|
4.8
|
|
|
4.9
|
|
|
9.4
|
|
|
9.6
|
|
|
(0.1
|
)
|
|
(0.2
|
)
|
Consolidated
(1)
(in millions):
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Variance
Increase (Decrease) |
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Three Month
|
|
Six Month
|
||||||||||||
EfW energy sales
|
$
|
64
|
|
|
$
|
76
|
|
|
$
|
141
|
|
|
$
|
159
|
|
|
$
|
(12
|
)
|
|
$
|
(18
|
)
|
EfW capacity
|
11
|
|
|
10
|
|
|
20
|
|
|
19
|
|
|
1
|
|
|
—
|
|
||||||
Other revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
(9
|
)
|
||||||
Total energy revenue
|
$
|
75
|
|
|
$
|
86
|
|
|
$
|
161
|
|
|
$
|
187
|
|
|
(11
|
)
|
|
(26
|
)
|
Total EfW (in millions):
|
Three Months Ended June 30,
|
|
Variance
Increase (Decrease) |
|||||||||||||||||||||||
|
2017
|
|
2016
|
|
2017 vs 2016
|
|||||||||||||||||||||
|
Revenue
(1)
|
|
Volume
(1) (2)
|
|
% of Total Volume
|
|
Revenue
(1)
|
|
Volume
(1) (2)
|
|
% of Total Volume
|
|
Revenue
|
|
Volume
|
|||||||||||
At Market
|
$
|
5
|
|
|
0.2
|
|
|
12
|
%
|
|
$
|
6
|
|
|
0.2
|
|
|
16
|
%
|
|
|
|
|
|||
Contracted
|
51
|
|
|
0.6
|
|
|
41
|
%
|
|
63
|
|
|
0.9
|
|
|
55
|
%
|
|
|
|
|
|||||
Hedged
|
19
|
|
|
0.7
|
|
|
47
|
%
|
|
17
|
|
|
0.4
|
|
|
29
|
%
|
|
|
|
|
|||||
Total EfW
|
$
|
75
|
|
|
1.4
|
|
|
100
|
%
|
|
$
|
86
|
|
|
1.5
|
|
|
100
|
%
|
|
$
|
(11
|
)
|
|
(0.1
|
)
|
|
Three Months Ended,
|
||||||
Recycled Metals Revenue (in millions):
|
2017
|
|
2016
|
||||
March 31,
|
$
|
16
|
|
|
$
|
13
|
|
June 30,
|
15
|
|
|
17
|
|
||
September 30,
|
|
|
14
|
|
|||
December 31,
|
|
|
17
|
|
|||
Total for the year ended December 31,
|
N/A
|
|
|
$
|
61
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||
|
Metal Revenue
(in millions)
|
|
Tons Recovered
(in thousands) |
|
Tons Sold
(in thousands) (1) |
||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Ferrous Metal
|
$
|
10
|
|
|
$
|
11
|
|
|
98
|
|
|
102
|
|
|
68
|
|
|
77
|
|
Non-Ferrous Metal
|
4
|
|
|
6
|
|
|
9
|
|
|
9
|
|
|
5
|
|
|
9
|
|
||
Total
|
$
|
15
|
|
|
$
|
17
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
Metal Revenue
(in millions)
|
|
Tons Recovered
(in thousands) |
|
Tons Sold
(in thousands) (1) |
||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Ferrous Metal
|
$
|
21
|
|
|
$
|
19
|
|
|
193
|
|
|
197
|
|
|
128
|
|
|
163
|
|
Non-Ferrous Metal
|
10
|
|
|
11
|
|
|
18
|
|
|
16
|
|
|
14
|
|
|
17
|
|
||
Total
|
$
|
31
|
|
|
$
|
30
|
|
|
|
|
|
|
|
|
|
Consolidated (in millions):
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Three Month
|
|
Six Month
|
||||||||||||
Plant maintenance
(1)
|
$
|
79
|
|
|
$
|
82
|
|
|
$
|
177
|
|
|
$
|
172
|
|
|
$
|
(4
|
)
|
|
$
|
5
|
|
All other
|
240
|
|
|
232
|
|
|
475
|
|
|
458
|
|
|
8
|
|
|
17
|
|
||||||
Plant operating expense
|
$
|
319
|
|
|
$
|
314
|
|
|
$
|
651
|
|
|
$
|
629
|
|
|
5
|
|
|
22
|
|
(1)
|
Plant maintenance costs include our internal maintenance team and non-facility employee costs for facility scheduled and unscheduled maintenance and repair expense.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Variance
Increase (Decrease)
|
|||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Three Month
|
|
Six Month
|
|||||||||||
|
|
|
|
|
(In millions)
|
|||||||||||||||||
Interest expense
|
35
|
|
|
34
|
|
|
$
|
71
|
|
|
$
|
68
|
|
|
1
|
|
|
$
|
3
|
|
||
Loss on asset sales
|
2
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
2
|
|
|
(6
|
)
|
|||||
Loss on extinguishment of debt
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|
(13
|
)
|
|||||
Other income, net
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||||
Total other expense
|
$
|
50
|
|
|
$
|
32
|
|
|
$
|
90
|
|
|
$
|
68
|
|
|
18
|
|
|
22
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Three Month
|
|
Six Month
|
||||||||||||
|
|
|
|
|
(In millions, except percentages)
|
||||||||||||||||||
Income tax (expense) benefit
|
$
|
(8
|
)
|
|
$
|
(3
|
)
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
(5
|
)
|
|
$
|
(4
|
)
|
Effective income tax rate
|
24
|
%
|
|
14
|
%
|
|
4
|
%
|
|
9
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Variance
Increase (Decrease)
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Three Month
|
|
Six Month
|
||||||||||||
|
(In millions, except per share amounts)
|
||||||||||||||||||||||
Net loss attributable to Covanta Holding Corporation
|
$
|
(37
|
)
|
|
$
|
(29
|
)
|
|
$
|
(89
|
)
|
|
$
|
(66
|
)
|
|
$
|
(8
|
)
|
|
$
|
(23
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
|
1
|
|
|
—
|
|
||||||
Diluted
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
|
1
|
|
|
—
|
|
||||||
Loss per share attributable to Covanta Holding Corporation Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
$
|
(0.28
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.18
|
)
|
Diluted
|
$
|
(0.28
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash dividend declared per share
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Diluted loss per share
|
$
|
(0.28
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.51
|
)
|
Reconciling items
(a)
|
0.06
|
|
|
0.01
|
|
|
0.10
|
|
|
0.10
|
|
||||
Adjusted EPS
|
$
|
(0.22
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.59
|
)
|
|
$
|
(0.41
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Reconciling Items
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Impairment charges
(a)
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
19
|
|
Loss on asset sales
(b)
|
2
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Severance and reorganization costs
|
1
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Insurance recoveries
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
||||
Loss on extinguishment of debt
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Effect on income of derivative instruments not designated as hedging instruments
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
1
|
|
||||
Effect of foreign exchange gain on indebtedness
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Total reconciling items, pre-tax
|
13
|
|
|
2
|
|
|
17
|
|
|
21
|
|
||||
Pro forma income tax impact
(c)
|
(5
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|
(8
|
)
|
||||
Grantor trust activity
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total reconciling items, net of tax
|
$
|
8
|
|
|
$
|
1
|
|
|
$
|
13
|
|
|
$
|
13
|
|
Diluted earnings per share impact
|
$
|
0.06
|
|
|
$
|
0.01
|
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
Weighted average diluted shares outstanding
|
130
|
|
|
129
|
|
|
129
|
|
|
129
|
|
(a)
|
During the three months ended
June 30, 2016
we recorded a non-cash impairment totaling
$4 million
, of which
$3 million
related to an investment in a joint venture to recover and recycle metals.
|
(b)
|
During the three months and six months ended
June 30, 2016
, we recorded a
$2 million
and
$6 million
charge, respectively, for indemnification claims related to the sale of our interests in China, which was completed in 2016.
|
(c)
|
We calculate the federal and state tax impact of each item using the statutory federal tax rate and applicable blended state rate.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net Loss Attributable to Covanta Holding Corporation
|
$
|
(37
|
)
|
|
$
|
(29
|
)
|
|
$
|
(89
|
)
|
|
$
|
(66
|
)
|
Depreciation and amortization expense
|
52
|
|
|
51
|
|
|
104
|
|
|
103
|
|
||||
Interest expense, net
|
35
|
|
|
34
|
|
|
71
|
|
|
68
|
|
||||
Income tax expense (benefit)
|
8
|
|
|
3
|
|
|
(3
|
)
|
|
(7
|
)
|
||||
Impairment charges
(a)
|
1
|
|
|
4
|
|
|
1
|
|
|
19
|
|
||||
Loss on asset sales
(a)
|
2
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Loss on extinguishment of debt
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Insurance recoveries
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
||||
Debt service billing in excess of revenue recognized
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Severance and reorganization costs
|
1
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Non-cash compensation expense
|
6
|
|
|
4
|
|
|
11
|
|
|
9
|
|
||||
Other non-cash items
|
1
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Capital type expenditures at service fee operated facilities
(b)
|
12
|
|
|
12
|
|
|
26
|
|
|
23
|
|
||||
Other
(c)
|
1
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Total adjustments
|
130
|
|
|
111
|
|
|
233
|
|
|
224
|
|
||||
Adjusted EBITDA
|
$
|
93
|
|
|
$
|
82
|
|
|
$
|
144
|
|
|
$
|
158
|
|
(a)
|
See
Adjusted EPS
discussion above.
|
(b)
|
Adjustment for impact of adoption of FASB ASC 853 -
Service Concession Arrangements.
These types of expenditures at our service fee operated facilities were historically capitalized prior to adoption of this accounting standard effective January 1, 2015.
|
(c)
|
Includes certain other items that are added back under the definition of Adjusted EBITDA in Covanta Energy's credit agreement.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cash flow provided by operating activities
|
$
|
16
|
|
|
$
|
27
|
|
|
$
|
26
|
|
|
$
|
62
|
|
Capital type expenditures at service fee operated facilities
(a)
|
12
|
|
|
12
|
|
|
26
|
|
|
23
|
|
||||
Cash paid for interest, net of capitalized interest
|
41
|
|
|
45
|
|
|
67
|
|
|
67
|
|
||||
Cash paid for taxes, net
|
2
|
|
|
—
|
|
|
1
|
|
|
4
|
|
||||
Adjustment for working capital and other
|
22
|
|
|
(2
|
)
|
|
24
|
|
|
2
|
|
||||
Adjusted EBITDA
|
$
|
93
|
|
|
$
|
82
|
|
|
$
|
144
|
|
|
$
|
158
|
|
(a)
|
See
Adjusted EBITDA - Note (b)
.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net cash provided by operating activities
|
$
|
16
|
|
|
$
|
27
|
|
|
$
|
26
|
|
|
$
|
62
|
|
Less: Maintenance capital expenditures
(a)
|
(37
|
)
|
|
(32
|
)
|
|
(64
|
)
|
|
(68
|
)
|
||||
Free Cash Flow
|
$
|
(21
|
)
|
|
$
|
(5
|
)
|
|
$
|
(38
|
)
|
|
$
|
(6
|
)
|
Uses of Free Cash Flow
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
|
|
|
|
|
|
||||||||
Growth investments
(b)
|
$
|
(45
|
)
|
|
$
|
(66
|
)
|
|
$
|
(95
|
)
|
|
$
|
(125
|
)
|
Property insurance proceeds
|
3
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Capital expenditures associated with property insurance events
|
(8
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
||||
Other investing activities, net
|
(2
|
)
|
|
2
|
|
|
(3
|
)
|
|
2
|
|
||||
Total investments
|
$
|
(52
|
)
|
|
$
|
(64
|
)
|
|
$
|
(102
|
)
|
|
$
|
(123
|
)
|
Return of capital to stockholders:
|
|
|
|
|
|
|
|
||||||||
Cash dividends paid to stockholders
|
$
|
(32
|
)
|
|
$
|
(32
|
)
|
|
$
|
(65
|
)
|
|
$
|
(65
|
)
|
Common stock repurchased
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
||||
Total return of capital to stockholders
|
$
|
(32
|
)
|
|
$
|
(32
|
)
|
|
$
|
(65
|
)
|
|
$
|
(85
|
)
|
Capital raising activities:
|
|
|
|
|
|
|
|
||||||||
Net proceeds from issuance of corporate debt
(c)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
393
|
|
|
$
|
—
|
|
Proceeds from Dublin financing
|
27
|
|
|
40
|
|
|
60
|
|
|
77
|
|
||||
Change in restricted funds held in trust
|
(4
|
)
|
|
3
|
|
|
—
|
|
|
13
|
|
||||
Other financing activities, net
|
8
|
|
|
(2
|
)
|
|
4
|
|
|
(1
|
)
|
||||
Deferred financing costs
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(3
|
)
|
||||
Net proceeds from capital raising activities
|
$
|
30
|
|
|
$
|
41
|
|
|
$
|
455
|
|
|
$
|
86
|
|
Debt repayments:
|
|
|
|
|
|
|
|
||||||||
Net cash used for scheduled principal payments on corporate debt
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
Net cash used for scheduled principal payments on project debt
(d)
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(4
|
)
|
||||
Voluntary prepayment of corporate debt
|
(410
|
)
|
|
—
|
|
|
(410
|
)
|
|
—
|
|
||||
Payments on equipment financing leases
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
||||
Total debt repayments
|
$
|
(412
|
)
|
|
$
|
(2
|
)
|
|
$
|
(421
|
)
|
|
$
|
(7
|
)
|
Borrowing activities - Revolving credit facility, net
|
$
|
89
|
|
|
$
|
64
|
|
|
$
|
132
|
|
|
$
|
145
|
|
Effect of exchange rate changes on cash and cash equivalents
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Net change in cash and cash equivalents
|
$
|
(396
|
)
|
|
$
|
2
|
|
|
$
|
(36
|
)
|
|
$
|
12
|
|
(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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Maintenance capital expenditures
|
$
|
(37
|
)
|
|
$
|
(32
|
)
|
|
$
|
(64
|
)
|
|
$
|
(68
|
)
|
Capital expenditures associated with construction of the Dublin EfW facility
|
(36
|
)
|
|
(48
|
)
|
|
(56
|
)
|
|
(73
|
)
|
||||
Capital expenditures associated with organic growth initiatives
|
(9
|
)
|
|
(8
|
)
|
|
(20
|
)
|
|
(22
|
)
|
||||
Capital expenditures associated with the New York City contract
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Capital expenditures associated with the Essex County EfW emissions control system
|
—
|
|
|
(8
|
)
|
|
(3
|
)
|
|
(18
|
)
|
||||
Total capital expenditures associated with growth investments
|
(45
|
)
|
|
(66
|
)
|
|
(79
|
)
|
|
(116
|
)
|
||||
Capital expenditures associated with property insurance events
|
(8
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
||||
Total purchases of property, plant and equipment
|
$
|
(90
|
)
|
|
$
|
(98
|
)
|
|
$
|
(152
|
)
|
|
$
|
(184
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Capital expenditures associated with growth investments
|
$
|
(45
|
)
|
|
$
|
(66
|
)
|
|
$
|
(79
|
)
|
|
$
|
(116
|
)
|
Acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(9
|
)
|
||||
Total growth investments
|
$
|
(45
|
)
|
|
$
|
(66
|
)
|
|
$
|
(95
|
)
|
|
$
|
(125
|
)
|
(c)
|
Excludes borrowings under Revolving Credit Facility. Calculated as follows:
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Proceeds from borrowings on long-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
$
|
—
|
|
Less: Financing costs related to issuance of long-term debt
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
||||
Net proceeds from issuance of corporate debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
393
|
|
|
$
|
—
|
|
(d)
|
Calculated as follows:
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total scheduled principal payments on project debt
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
(12
|
)
|
|
$
|
(9
|
)
|
Decrease in related restricted funds held in trust
|
3
|
|
|
1
|
|
|
5
|
|
|
5
|
|
||||
Net cash used for scheduled principal payments on project debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
|
$
|
(4
|
)
|
•
|
Enhanced analysis of tax-sensitive aspects of a business transaction;
|
•
|
Formalized documentation of the above referenced tax analysis; and
|
•
|
Enhanced review of the above referenced tax analysis prior to finalizing.
|
Exhibit
Number
|
|
Description
|
|
||
|
||
|
||
|
||
Exhibit 101.INS:
|
|
XBRL Instance Document
|
Exhibit 101.SCH:
|
|
XBRL Taxonomy Extension Schema
|
Exhibit 101.CAL:
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
Exhibit 101.DEF:
|
|
XBRL Taxonomy Extension Definition Linkbase
|
Exhibit 101.LAB:
|
|
XBRL Taxonomy Extension Labels Linkbase
|
Exhibit 101.PRE:
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
COVANTA HOLDING CORPORATION
(Registrant)
|
|
|
|
|
|
By:
|
/
S
/ B
RADFORD
J. H
ELGESON
|
|
|
Bradford J. Helgeson
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
|
By:
|
/
S
/ M
ANPREET
S. G
REWAL
|
|
|
Vice President and Chief Accounting Officer
|
Number of RSUs
Subject to Annual Award
|
Conversion Date
|
|
|
RSUs Subject to 20__ Elected Awards
|
Conversion Date
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Covanta Holding Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/
S
/ S
TEPHEN
J. J
ONES
|
|
Stephen J. Jones
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Covanta Holding Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/
S
/ B
RADFORD
J. H
ELGESON
|
|
Bradford J. Helgeson
|
|
Executive Vice President, Chief Financial Officer and Principal Accounting Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Covanta Holding Corporation;
|
|
|
|
/
S
/ S
TEPHEN
J. J
ONES
|
|
Stephen J. Jones
|
|
President and Chief Executive Officer
|
|
|
|
/
S
/ B
RADFORD
J. H
ELGESON
|
|
Bradford J. Helgeson
|
|
Executive Vice President and Chief Financial Officer and Principal Accounting Officer
|
|
|