Covanta Holding Corp., Morristown, New Jersey, has reported the company’s financial results for the three and six months period ending June 30.
Total revenue for the second quarter totaled $506 million, up $52 million as compared with the year prior. This increase was driven in part by an improved waste revenue of $27 million, which included growth in all areas:
- Tip fees were up $11 million (7 percent) on higher prices.
- Service fees were up $8 million (7 percent) primarily because of higher plant throughput.
- Material processing and recycling revenue were up $8 million with the strong recovery in demand in Covanta’s environmental services business.
According to the company, energy revenue also increased by $8 million because of higher market prices, increased electricity sales volumes and increased revenue from renewable energy credit. As for materials sales, Covanta saw an increase of $18 million, with a $13 million increase in ferrous revenue on higher market prices and a $6 million increase in nonferrous revenue arising from market prices and higher sales volume.
Total operating expenses were $481 million in the quarter, up $45 million over the prior-year period. Covanta credits this to wages and benefits rising by $17 million; maintenance expenses increasing by $8 million because of the timing of planned outage activity; other operating costs increasing by $14 million primarily related to higher waste volumes in the quarter; and general and administrative expense rising by $6 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by $14 million to $110 million, driven primarily by higher waste and commodity prices, and partially offset by higher costs compared to the prior-year cost mitigation program and heavier planned maintenance expense.
Free cash flow was $62 million in the quarter, effectively unchanged compared with the prior-year quarter, as higher adjusted EBITDA was offset by higher planned maintenance capital expenditures.
The company notes that the agreement with EQT to purchase Covanta at $20.25 per share will close during the fourth quarter, subject to customary closing conditions including approval by the majority of the holders of Covanta's outstanding common shares.