Covanta Holding's CEO Discusses Q3 2012 Results - Earnings Call Transcript
October 18, 2012 12:40 PM ET
Covanta Holding Corporation (CVA)
Q3 2012 Earnings Call
October 18, 2012, 8:30 a.m. ET
Alan Katz - VP, IR
Anthony J. Orlando - President and CEO
Sanjiv Khattri – CFO
Tom Bucks – CAO
Brad Helgeson - Treasurer
Daniel Mannes - Avondale Partners, LLC
Ben Kallo - Robert W. Baird & Co.
Scott Levine - JPMorgan
Michael Hoffman – Wunderlich Securities
Gregg Orill - Barclays Capital
Al Kaschalk - Wedbush Securities Inc.
Smittipon Srethapramote - Morgan Stanley & Co. LLC
Good morning everyone, and welcome to the Covanta Holding Corporation's third quarter 2012 financial results conference call and webcast. This call is being tape and a replay will be available to listen to later this morning. For the replay, please call 877-344-7529, and use the replay conference ID Number 10019283. The webcast will also be archived on www.Covantaenergy.com. and can be replayed or downloaded as an MP3 file.
At this time for opening remarks and introductions, I'd like to turn the call over to Mr. Alan Katz, Covanta's Vice President of Investor Relations. Mr. Katz, please go ahead.
Thank you, Amy and good morning. Welcome to Covanta's third quarter 2012 conference call.
The RR team had a busy quarter. We did two West Coast investor trips as well as our typical plant tours and investor meetings in the Tri-state area. I wanted to take this opportunity to tell everyone that we'll be starting a quarterly plant core program to give everyone a chance to see one of our facilities. It has been our experience seeing our operations is an important element of the investment thesis for Covanta. If you're interested, please reach out to me after the call and we can discuss the details. Or you can sign up on the IR section of our website, Covantaenergy.com.
Moving on, joining me on the call today will be Tony Orlando, our President and CEO, Sanjiv Khattri, our CFO, Tom Bucks, our Chief Accounting Officer, and Brad Helgeson, our Treasurer. We will provide an operational and business update, review our financial results, and then take your questions. During their prepared remarks, Tony and Sanjiv will be referencing certain slides that we prepared to supplement the audio portion of this call. Those slides can be accessed now or after the call on the investor relations section of the website. These prepared remarks should be listened to in conjunction with those slides.
Now on to the Safe Harbor. The following discussion may contain forward-looking statements and our actual results may differ materially from those expectations. Information regarding factors that could cause this differences can be found in the company's reports and registration statements filed with the SEC.
The content of this conference call contains time sensitive information that is only accurate as of the date of this live broadcast, October 18th, 2012. We do not assume any obligations to update our forward-looking information unless required by law. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Covanta is prohibited.
The information presented includes non-GAAP financial measures, reconciliations the most directly comparable GAAP measure, and management's reason for presenting such information is set forth in the press release that was issued last night as well as the slides posted on our website. Because these measures are not calculated in accordance with U.S. GAAP, these should not be considered in isolation from our financial statements prepared in accordance with U.S. GAAP.
It should also be noted that our computations of free-cash flow, adjusted EBITDA, and adjusted EPS may differ from similarly titled computations used by other companies.
With that, I'd like to turn the call over to our President and CEO, Tony Orlando.
Anthony J. Orlando
Thanks, Alan. Good morning everyone.
Let's begin with a quick summary of the quarter. For those of you using the web text, please turn to slide three.
Sanjiv will walk you through our financials, but generally, the third quarter results were in line with our expectations. Our organic growth initiatives were offset by challenging markets and maintenance timing.
Our operating track record continues to be strong and predictable. We completed the Honolulu expansion project and a third boiler is now in commercial operation. We renewed and negotiated several important contracts including a waste contract at our Essex facility and our Long Island Power contracts. And we maintained our focus on our organic growth initiatives.
We now order guidance toward the lower end of our original range primarily because energy and metal market declines. Notwithstanding this, we're still on track to grow our adjusted EBITDA for the full year and to achieve our initial guidance on all metrics. We're able to do this because we're executing on the challenging organic growth targets we set for ourselves at the beginning of the year to overcome lower debt service revenue and lower energy prices.
New projects in construction have been positive contributors. Special waste is growing nicely. And we're doing an excellent job maintaining our facilities while managing our costs. I'm also pleased with the work we're doing to recover more metal. Although we are a bit behind the aggressive timeline we originally set for ourselves in terms of new project installations. That will reduce the benefit we had initially planned on seeing in Q4, but we'll definitely get the benefit next year.
As I said in the past, we're intent on continuing to grow our bottom line not just this year, but also next year and in the years ahead.
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