Covanta Holding's Loss Narrower than Expected - Analyst Blog

Covanta Holding Corporation CVA incurred a loss per share of 3 cents in the first quarter of 2014, narrower than the Zacks Consensus Estimate of a loss of 14 cents as well as the prior-year loss of 19 cents per share.

The better-than-expected performance was driven mainly by higher energy prices in its service territories due to a severe winter.

Total Revenue

Total revenue was $401.0 million in the quarter, surpassing the Zacks Consensus Estimate of $383.0 million by 4.7%. The top line increased 7.8% from the year-ago figure of $372.0 million.

The improved results were attributable to higher waste tons processed and higher energy pricing at both energy-from-waste and biomass facilities plus a favorable outcome from the Camden acquisition in 2013. However, this was partially offset by lower revenue contribution from construction and debt services.

Operating Highlights

Operating expenses in the first quarter were $386.0 million, up 3.2% from the year-ago quarter primarily due to higher plant maintenance costs.

Covanta Holding clocked an operating income of $15.0 million in the reported quarter as against a loss of $2.0 million a year ago.

Financial Highlights

Cash and cash equivalents as of Mar 31, 2014, were $389.0 million, up from $198.0 million as of Dec 31, 2013.

Long-term debts as of Mar 31, 2014, were $1,754.0 million versus $1,557.0 million as of Dec 31, 2013.

Cash flow from operating activities in the first quarter of 2014 was $102.0 million compared with $64.0 million in the first quarter of 2013.

Shareholder Returns

Covanta Holding has an impressive dividend payout track record. In Feb 2014, the company increased the quarterly dividend rate by 9.0% to 18 cents from 16.5 cents per share, raising the annualized payout to 72.0 cents per share.

Guidance

Covanta Holding reaffirmed its outlook for 2014. It expects adjusted earnings before interest, tax, depreciation and amortization in the $470.0–$500.0 million range and free cash flow within $170.0–$210.0 million. The company expects earnings per share to come in between 35 cents to 50 cents for the year.

Other Upcoming Releases

Pattern Energy Group Inc. PEGI is scheduled to release its fourth quarter earnings on May 2. The Zacks Consensus Estimate is currently at 11 cents.

AGL Resources Inc. GAS is scheduled to release its fourth quarter earnings on Apr 29. The Zacks Consensus Estimate is currently at $1.85 per share.

Ormat Technologies Inc. ORA is expected to release its fourth quarter earnings on May 6. The Zacks Consensus Estimate is currently at 25 cents.

Covanta Holding currently carries a Zacks Rank #3 (Hold).