In conference calls with investors, Covanta Holding Corp. and Advanced Disposal Services Inc. discussed fourth quarter and full year earnings and provided outlooks on what 2018 could have in store.
Both companies reported increases in fourth quarter revenues over the prior year period. Covanta expressed optimism for the year of 2018, based partially on a full year of operation at both its Fairfax, Va., facility and its Dublin facility. Advanced Disposal cited strong economic growth in 2017 and discussed an attractive pipeline for mergers and acquisitions in 2018.
Covanta Announces Fourth Quarter Revenues of $495M
Morristown, N.J.-based Covanta posted revenues of $1.75 billion in 2017, an increase of $53 million over 2016 revenue of $1.70 billion.
“We are entering the year in a strong position to deliver on our 2018 plan and execute on our attractive longer-term growth opportunities,” Covanta President and CEO Stephen J. Jones said in a statement. “The Dublin plant is operating extremely well, waste markets are robust, and metal prices have clearly firmed. Our strategic partnership with GIG headlines our international development plan, and we are excited about the growth opportunities this platform enables. The Rookery project is scheduled to break ground in the first half of 2018, and we expect incremental progress on other UK development projects as we move through the year. We look forward to solid growth in 2018, supported by the recovery of the Fairfax facility, and I am excited by the growth trajectory going forward.”
Covanta ended the year of 2017 with adjusted EBITDA of $408 million, free cash flow of $132 million and free cash flow before working capital of $88 million. The company posted a net income of $57 million for the full year of 2017.
In a conference call with investors, Jones discussed the impact of the fire that took place at the company’s Fairfax, Va., facility, which took the facility offline for most of 2017. The facility resumed operations in late December 2017. Despite complications from Fairfax, Jones was optimistic about 2017 overall.
“2017 was a year of extreme progress in our international development initiative,” Jones said during the call.
Other highlights from the company’s performance:
- The company reported total operating revenue of $495 million for the fourth quarter of 2017, compared to $457 million in the prior year period.
- Total operating expenses for the year of 2017 was $1.651 billion, compared to $1.59 billion in 2016.
- Waste and service revenue grew by $44 million in 2017 to $1.231 billion. Fourth quarter waste and service revenue was $329 million.
- Energy revenue for the fourth quarter was $93 million, compared to $91 million for the prior year period.
- Recycled metals revenue was $28 million for the fourth quarter of 2017 and $82 million for the year of 2017. This was an increase of $21 million over the full year of 2016, and it consisted of $48 million in ferrous metals revenue and $34 million in non-ferrous metals revenue.
- Net cash provided by operating activities for the full year of 2017 was $243 million, compared to $286 million in 2016.
- For the fourth quarter of 2017, diluted earnings per share (EPS) was $1.01 and adjusted EPS was $0.09, compared to $0.06 and $0.17, respectively, in the prior year period.
- For the year of 2018, Covanta expects adjusted EBITDA to be between $425 million and $455 million. They expect free cash flow to be between $70 million and $100 million, and they expect free cash flow before working capital to be between $100 million and $130 million.
Advanced Disposal Reports $384.4M in Fourth Quarter Revenues
Ponte Vedra, Fla.-based Advanced Disposal Services posted its fourth quarter and full year 2017 results. For the year, the firm posted $1.507 billion in revenues, which represents a 7.3 percent increase over 2016.
"One of our key areas of focus is cash flow generation, and we are pleased that for 2017 Advanced Disposal achieved a 30 percent increase in cash from operations and 40 percent increase in adjusted free cash flow year-over-year" Advanced Disposal CEO Richard Burke said in a statement. "We also are seeing strong top-line growth, which should position us well as we move into 2018."
The company completed 14 acquisitions in 2017, the most notable of which being the purchase of CGS Services Inc. in the first quarter. In a conference call with investors, Burke said that the market for acquisitions is expected to remain strong in 2018.
“The fourth quarter capped off our first year as a public company, where we executed on a number of key initiatives,” said Burke in a conference call with investors.
Other highlights from the company’s performance:
- Revenue for the fourth quarter of 2017 was $384.4 million, compared to $352 million in the prior year period. This represents a 9.2 percent increase in revenue.
- Net income for the fourth quarter of 2017 was $42.0 million, or $0.47 per diluted share, compared to a net loss of $20.1 million, or $0.24 per share, in the prior year period.
- Adjusted EBITDA for the fourth quarter of 2017 was $108.8 million, compared to $107.7 million in the prior year period. For the full year of 2017, adjusted EBITDA was $418.1 million.
- Adjusted net income for the fourth quarter was $11.2 million, and adjusted diluted earnings per share (EPS) for the fourth quarter was $0.13.
- The company received a credit rating upgrade in 2017 by Standard & Poor’s.
- For the full year of 2017, net income was $38.3 million, compared to a net loss of $20.1 million in 2016.
- Cash provided by operating activities for the full year of 2017 was $308.8 million, which was an increase of 30 percent over 2016.
- Adjusted free cash flow for the full year of 2017 was $131.8 million, a 40 percent increase over 2016.
- Looking ahead to 2018, the company estimates revenues of between $1.545 billion and $1.565 billion. This includes average yield of 2.1 percent to 2.8 percent, organic volume of 0.4 percent to 1.0 percent, acquisition rollover revenue of 1.3 percent and an estimated 1.4 percent impact from lower revenue from the sale of commodities and the adoption of the new revenue recognition standard.
- Adjusted EBITDA is estimated to be between $426 million and $436 million for the full year of 2018.
- For the year of 2018, capital expenditures are estimated to be between $184 million and $194 million.
- For the year of 2018, adjusted free cash flow is estimated to be between $134 million and $144 million.