However, third quarter recurring base energy EBIT was $40 million, 29% increase over 2000 third quarter
FAIRFIELD, N.J., November 13, 2001 — Covanta Energy Corporation today reported results for the third quarter and nine months ended September 30, 2001.
Recurring base earnings before interest and taxes (EBIT) from the Company’s continuing Energy operations were $40 million for the quarter ended September 30, 2001, compared to $31 million in the comparable period of 2000. On a consolidated basis, including expenses associated with non-core activities and corporate interest, the Company reported a net loss of $6 million, or $0.12 per diluted share. For the quarter ended September 30, 2000, the Company reported a consolidated net loss of $34 million, including net losses from discontinued operations.
Recurring base EBIT from continuing Energy operations were $111 million for the nine months ended September 30, 2001, compared to $75 million in the comparable period of 2000. On a consolidated basis, net income amounted to $18 million for the first nine months of 2001 or $0.35 per diluted share, compared to a consolidated net loss for the same period of a year ago of $141 million, including a net loss from discontinued operations of $129 million.
“In the face of a rapidly changing energy market, our base energy business continues to perform well. This results from continued strong production at our energy facilities, as well as our business practice of utilizing long-term, fixed price contracts which lock-in acceptable returns on our invested capital and minimize our risks to energy market fluctuations,” said Scott G. Mackin, President and Chief Executive Officer.
Covanta continues to expect recurring proforma earnings per share (EPS) for 2001 for its Energy business of between $1.18 and $1.22. Embedded in this EPS projection is an expectation that recurring base Energy EBIT will aggregate approximately $120 to $123 million, or a 17% increase over 2000.
For the three months ended September 30, 2001, the Company reported EBIT from its continuing Energy business of $40 million on revenues of $240 million, compared to EBIT of $30 million on revenues of $212 million in the comparable period of 2000. The 2000 EBIT results included $1 million of non-recurring expenses associated with additional depreciation in connection with shortened estimated useful lives of certain pollution control equipment.
The recurring base Energy EBIT for the three months ended September 30, 2001 was $40 million, compared to $31 million for the comparable period in 2000. The increase in recurring base Energy EBIT of $9 million, or 29%, is largely due to the continued strong performance at the waste-to-energy (WTE) facilities and the contributions of Covanta Water, specifically related to the Bessemer facility and smaller DualSandO contracts in upstate New York. In addition, the Company’s Samalpatti, India project, which commenced commercial operations during the second quarter of 2001 and the Quezon project in The Philippines, which came on stream in the second quarter of 2000, contributed favorably to this quarter’s results. The implementation of the organizational study the Company completed in late 2000 continues to improve the bottom line. On a proforma per share basis, earnings of the recurring Energy business for the third quarter of 2001, amounted to $0.41, compared to the Company’s earnings of $0.29 per share for the year-ago quarter.
In addition to the factors previously noted, the 2001 third quarter benefited from reductions in unallocated corporate overhead, as well as reduced interest expense (net). This was more than offset by losses on non-energy businesses, primarily related to a loss on the sale of Datacom, a subsidiary involved in the manufacturing of electro-mechanical devices for computers and other equipment.
For the nine months ended September 30, 2001, the Company reported EBIT from its Energy business of $137 million on revenues of $719 million, compared to EBIT of $87 million on revenues of $630 million in the comparable period of 2000. The 2001 results include $26 million of net non-recurring income consisting of approximately $21 million in insurance settlement proceeds related to a WTE facility, and $6 million associated with the reimbursement of the Quezon project development expenses. The 2000 EBIT results include $12 million of non-recurring income also resulting from an insurance settlement related to a WTE facility, offset by the additional depreciation expense noted above.
Adjusting for non-recurring items, the recurring base Energy EBIT for the nine months ended September 30, 2001 was $111 million, compared to $75 million for the comparable period in 2000. The increase in recurring base Energy EBIT of $36 million, or 48%, is largely due to continued strong production at various independent power (IPP) and WTE sites, as well as the addition of a full quarter’s operation of the Samalpatti project and improved performance at the Quezon project and in Covanta’s Water operations. In addition, the bottom line was favorably impacted by the reductions in overhead resulting from implementation of the organizational study the Company completed in the fourth quarter of 2000. On a proforma per share basis, earnings of the recurring energy business for the first nine months of 2001 amounted to $1.10, compared to the Company’s earnings of $0.60 per share for the comparable period a year ago.
In addition to the factors previously noted, the first nine months of 2001 benefited from significantly lower unallocated corporate overhead and interest expense (net), partially offset by an increase in charges associated with non-energy activities, including the loss on the sale of Datacom.
Covanta Energy Corporation is an internationally recognized designer, developer, owner and operator of power generation projects and provider of related infrastructure services. Additional information about Covanta can be obtained via the Internet at www.covantaenergy.com.
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