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Form 8-K COVANTA HOLDING CORP For: Jul 26

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July 26, 2016 4:32 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________ 
FORM 8-K
________________________________________________________ 
 CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 26, 2016
________________________________________________________ 
COVANTA HOLDING CORPORATION
(Exact name of Registrant as Specified in Its Charter)
 ________________________________________________________
 
 
 
 
 
Delaware
 
1-06732
 
95-6021257
(State or Other Jurisdiction of
Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
445 South Street
Morristown, New Jersey
 
07960
(Address of principal executive offices)
 
(Zip Code)
(862) 345-5000
(Registrant’s telephone number, including area code)
________________________________________________________
 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02.
Results of Operations and Financial Condition.
On July 26, 2016, Covanta Holding Corporation (the "Company") issued a press release reporting the unaudited results for the second quarter ended June 30, 2016, and announcing a conference call and webcast to be held at 8:30 a.m. (Eastern) on Wednesday, July 27, 2016 to discuss these results. A copy of this press release is attached as Exhibit 99.1 hereto and incorporated herein by reference. This information includes certain non-GAAP financial information as identified in Exhibit 99.1.
 
Item 7.01.
Regulation FD Disclosure.
On July 26, 2016, the Company posted to its website materials that will be used in conjunction with its conference call and webcast regarding its unaudited results for its second quarter period ended June 30, 2016, which will be held on Wednesday, July 27, 2016 at 8:30 a.m. (Eastern). A copy of these materials is furnished as Exhibit 99.2 to this Form 8-K. This information includes certain non-GAAP financial information as identified in Exhibit 99.2.
The information in this Form 8-K, Exhibit 99.1 and Exhibit 99.2 is furnished pursuant to Item 2.02 and Item 7.01 of this Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.
Financial Statements and Exhibits.

(c) Exhibits

Exhibit No.
  
Exhibit
 
 
 
99.1
  
Press Release, dated July 26, 2016.
 
 
 
99.2
  
Earnings Materials, dated July 26, 2016.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 26, 2016

COVANTA HOLDING CORPORATION
(Registrant)
 
 
 
 
By:
 
/s/ Timothy J. Simpson
Name:
 
Timothy J. Simpson
Title:
 
Executive Vice President, General Counsel and Secretary





COVANTA HOLDING CORPORATION
EXHIBIT INDEX
 
Exhibit No.
  
Exhibit
 
 
 
99.1
  
Press Release, dated July 26, 2016.
 
 
 
99.2
  
Earnings Materials, dated July 26, 2016.



Exhibit 99.1
        


COVANTA HOLDING CORPORATION REPORTS
2016 SECOND QUARTER RESULTS AND
REAFFIRMS 2016 FULL YEAR GUIDANCE

MORRISTOWN, NJ, JULY 26, 2016 - Covanta Holding Corporation (NYSE: CVA) ("Covanta" or the "Company"), a world leader in sustainable waste and energy solutions, reported financial results today for the three and six months ended June 30, 2016.

 
Three Months Ended
June 30,
 
2016
 
2015
 
(Unaudited, $ in millions, except per share amounts)
Revenue
$418
 
$408
Net Loss
$(29)
 
$(6)
Adjusted EBITDA
$82
 
$83
Cash flow provided by (used in) operating activities
$27

$(11)
Free Cash Flow
$(5)
 
$(40)
Diluted Loss Per Share
$(0.23)

$(0.05)
Adjusted EPS
$(0.22)
 
$(0.06)
Reconciliations of non-GAAP measures can be found in the exhibits to this press release.

“We saw continued improvement in our waste pricing in the second quarter, driven by growth of profiled waste volumes and strong market dynamics in the Northeast," stated Stephen J. Jones, Covanta's President and CEO.  "Construction at our Dublin EfW facility is on track and we expect to have waste contracted for approximately 90 percent of facility capacity by the end of the year. The modest rebound we have seen in the commodity markets since the beginning of the year is encouraging and overall, we’ve positioned ourselves for a solid finish to the year, in line with our initial expectations.” 

Second Quarter Results
For the three months ended June 30, 2016, total revenue increased by $10 million to $418 million from $408 million in Q2 2015. An increase in waste and service revenue was partially offset by a decrease in energy revenue.

Same store North America EfW revenue decreased by $1 million as follows:
•
waste and service revenue increased by $4 million, primarily driven by price improvement;
•
energy revenue decreased by $4 million, primarily driven by lower market prices; and
•
recycled metals revenue decreased by $2 million, driven by lower market prices.



  

Also within North America EfW revenue, contract transitions resulted in an increase of $5 million due to additional energy revenue sharing.

All other revenue (non-EfW operations) increased by $3 million on a consolidated basis. Waste and service revenue from non-EfW operations increased by $16 million, primarily due to contribution from newly acquired environmental solutions businesses and the New York City MTS contract. Energy revenue from non-EfW operations decreased by $17 million, representing the contribution from biomass facilities and China in the prior year.

Excluding impairment charges(1), operating expense increased by $10 million to $409 million. The year-over-year increase was primarily due to:
•
a $9 million increase in North America EfW plant operating expense;
•
a $12 million increase in North America segment non-EfW plant operating expense, primarily related to operations in our newly acquired environmental solutions businesses, the New York City MTS contract, start-up of the centralized metals processing facility, and higher accruals for employee incentive compensation, partially offset by shutting down remaining biomass facilities;
•
a $7 million decrease in plant operating expense outside the North America segment due to the exchange in ownership interests in EfW facilities located in China; and
•
an $8 million decrease in North America other operating expense primarily related to construction projects at Honolulu and Durham-York EfW facilities in the prior year.

Adjusted EBITDA declined by $1 million on a year-over-year basis to $82 million, primarily due to lower prices for energy and metals and increased accrual for employee incentive compensation, partially offset by the contribution of newly acquired environmental solutions businesses and contract transitions.

Free Cash Flow increased by $35 million to $(5) million, primarily as a result of a smaller outflow from working capital, partially offset by higher maintenance capex.

Adjusted EPS decreased by $0.16 to $(0.22). The decrease was driven primarily by book income taxes, partially offset by higher operating income.

Shareholder Returns
During the quarter, the Company declared a regular cash dividend of $0.25 per share, totaling $33 million.









(1) Q2 2016 and Q2 2015 include impairment charges of $4 million and $24 million, respectively. For additional information, see Exhibit 4 - Note (a) of this press release.



2016 Guidance
The Company is reaffirming its guidance for 2016 for the following key metrics:

(In millions)
Metric
2015
Actual
2016
Guidance Range(2)
Adjusted EBITDA
$ 428
$390 - $430
Free Cash Flow
$ 147
$140 - $180

(2) For additional information on the reconciliation of Free Cash Flow to Cash flow provided by (used in) operating activities, see Exhibit 5 of this press release.

Conference Call Information
Covanta Holding Corporation (NYSE: CVA) (“Covanta” or the “Company”) will host a conference call at 8:30 AM (Eastern) on Wednesday, July 27, 2016 to discuss its second quarter results. The conference call will begin with prepared remarks, which will be followed by a question and answer session. To participate, please dial 1-800-860-2442 approximately 10 minutes prior to the scheduled start of the call. If calling from Canada, please dial 1-866-605-3852. If calling outside of the United States and Canada, please dial 1-412-858-4600. Please request the “Covanta Holding Corporation call” when prompted by the conference call operator. The conference call will also be webcast live from the Investor Relations section of the Company’s website. A presentation will be made available during the call and will be found on the Investor Relations section of the Covanta website at www.covanta.com.

A replay will be available one hour after the end of the conference call through 9:00 AM (Eastern) August 3, 2016. To access the replay, please dial 1-877-344-7529, or from outside of the United States 1-412-317-0088 and use the replay conference ID number 10089385. The webcast will also be archived on www.covanta.com.

About Covanta
Covanta is a world leader in providing sustainable waste and energy solutions. Annually, Covanta’s modern Energy-from-Waste facilities safely convert approximately 20 million tons of waste from municipalities and businesses into clean, renewable electricity to power one million homes and recycle approximately 500,000 tons of metal. Through a vast network of treatment and recycling facilities, Covanta also provides comprehensive industrial material management services to companies seeking solutions to some of today’s most complex environmental challenges. For more information, visit www.covanta.com.

Cautionary Note Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking" statements as defined in Section 27A of the Securities Act of 1933 (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the "PSLRA") or in releases made by the Securities and Exchange Commission ("SEC"), all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Covanta Holding Corporation and its subsidiaries ("Covanta") or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other


things, the use of forward-looking language, such as the words "plan," "believe," "expect," "anticipate," "intend," "estimate," "project," "may," "will," "would," "could," "should," "seeks," or "scheduled to," or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the "safe harbor" provisions of such laws. Covanta cautions investors that any forward-looking statements made by Covanta are not guarantees or indicative of future performance. Important factors, risks and uncertainties that could cause actual results to differ materially from those forward-looking statements with respect to Covanta include, but are not limited to: fluctuations in the prices of energy, waste disposal, scrap metal and commodities; adoption of new laws and regulations in the United States and abroad; the fee structures of our contracts; difficulties in the operation of our facilities, including fuel supply and energy transfer interruptions, failure to obtain regulatory approvals, equipment failures, labor disputes and work stoppages, weather interference and catastrophic events; difficulties in the financing, development and construction of new projects and expansions, including increased construction costs and delays; limits of insurance coverage; our ability to avoid defaults under our long-term service contracts; performance of third parties under our contractual arrangements; concentration of suppliers and customers; increased competitiveness in the energy industry; changes in foreign currency exchange rates; limitations imposed by our existing indebtedness; exposure to counterparty credit risk and instability of financial institutions in connection with financing transactions; our ability to utilize our net operating losses; failures of disclosure controls and procedures; general economic conditions in the United States and abroad, including the availability of credit and debt financing and market conditions at the time our contracts expire; and other risks and uncertainties affecting our businesses described in Item 1A. Risk Factors of our Annual Report on Form 10-K and in other filings by Covanta with the SEC.

Although Covanta believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any of its forward-looking statements. Covanta's future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this press release are made only as of the date hereof and Covanta does not have, or undertake, any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.

Investor Contact
Alan Katz
1-862-345-5456

Media Contact
James Regan
1-862-345-5216




Covanta Holding Corporation
Exhibit 1
Condensed Consolidated Statements of Operations
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
(In millions, except per share amounts)
Operating revenue
 
 
 
 
 
 
 
Waste and service revenue
$
297

 
$
276

 
$
576

 
$
522

Energy revenue
86

 
99

 
187

 
211

Recycled metals revenue
17

 
17

 
30

 
33

Other operating revenue
18

 
16

 
28

 
25

Total operating revenue
418

 
408

 
821

 
791

Operating expense
 
 
 
 
 
 
 
Plant operating expense
314

 
300

 
629

 
589

Other operating expense
19

 
26

 
31

 
37

General and administrative expense
25

 
23

 
48

 
51

Depreciation and amortization expense
51

 
50

 
103

 
98

Impairment charges (a)
4

 
24

 
19

 
24

Total operating expense
413

 
423

 
830

 
799

Operating income (loss)
5

 
(15
)
 
(9
)
 
(8
)
Other expense
 
 
 
 
 
 
 
Interest expense, net
(34
)
 
(33
)
 
(68
)
 
(68
)
Loss on extinguishment of debt
—

 
(2
)
 
—

 
(2
)
Other expense, net
2

 
1

 
—

 
(1
)
Total other expense
(32
)
 
(34
)
 
(68
)
 
(71
)
Loss before income tax (expense) benefit and equity in net income from unconsolidated investments
(27
)
 
(49
)
 
(77
)
 
(79
)
Income tax (expense) benefit
(3
)
 
40

 
7

 
30

Equity in net income from unconsolidated investments
1

 
3

 
4

 
6

Net Loss Attributable to Covanta Holding Corporation
$
(29
)
 
$
(6
)
 
$
(66
)
 
$
(43
)
 
 
 
 
 
 
 
 
Weighted Average Common Shares Outstanding:
 
 
 
 
 
 
 
Basic
129

 
132

 
129

 
132

Diluted
129

 
132

 
129

 
132

 
 
 
 
 
 
 
 
Loss Per Share:
 
 
 
 
 
 
 
Basic
$
(0.23
)
 
$
(0.05
)
 
$
(0.51
)
 
$
(0.33
)
Diluted
$
(0.23
)
 
$
(0.05
)
 
$
(0.51
)
 
$
(0.33
)
 
 
 
 
 
 
 
 
Cash Dividend Declared Per Share
$
0.25

 
$
0.25

 
$
0.50

 
$
0.50

 
 
 
 
 
 
 
 
(a) For additional information, see Exhibit 4 - Note (a) of this Press Release.






Covanta Holding Corporation
Exhibit 2
Condensed Consolidated Balance Sheets
 
 
As of
 
June 30, 2016
 
December 31, 2015
 
(Unaudited)

 
ASSETS
(In millions, except per share amounts)
Current:
 
 
 
Cash and cash equivalents
$
108

 
$
94

Restricted funds held in trust
65

 
77

Receivables (less allowances of $8 million and $7 million, respectively)
298

 
312

Prepaid expenses and other current assets
137

 
114

Assets held for sale
—

 
97

Total Current Assets
608

 
694

Property, plant and equipment, net
2,958

 
2,690

Restricted funds held in trust
73

 
83

Waste, service and energy contract intangibles, net
274

 
284

Other intangible assets, net
37

 
38

Goodwill
303

 
301

Other assets
73

 
121

Total Assets
$
4,326

 
$
4,211

LIABILITIES AND EQUITY
 
 
 
Current:
 
 
 
Current portion of long-term debt
$
9

 
$
8

Current portion of project debt
25

 
16

Accounts payable
59

 
90

Accrued expenses and other current liabilities
265

 
234

Liabilities held for sale
—

 
23

Total Current Liabilities
358

 
371

Long-term debt
2,398

 
2,255

Project debt
323

 
159

Deferred income taxes
574

 
595

Waste, service and other contract intangibles, net
10

 
13

Other liabilities
183

 
178

Total Liabilities
3,846

 
3,571

Equity:
 
 
 
Covanta Holding Corporation stockholders' equity:
 
 
 
Preferred stock ($0.10 par value; authorized 10 shares; none issued and outstanding)
—

 
—

Common stock ($0.10 par value; authorized 250 shares; issued 136 shares, outstanding 130 and 131 shares, respectively)
14

 
14

Additional paid-in capital
800

 
801

Accumulated other comprehensive loss
(48
)
 
(34
)
Accumulated deficit
(285
)
 
(143
)
Treasury stock, at par
(1
)
 
—

Total Covanta Holding Corporation stockholders' equity
480

 
638

Noncontrolling interests in subsidiaries
—

 
2

Total Equity
480

 
640

Total Liabilities and Equity
$
4,326

 
$
4,211

 
 
 
 





Covanta Holding Corporation
Exhibit 3
Condensed Consolidated Statements of Cash Flow
 
 
Six Months Ended June 30,
 
2016
 
2015
 
(Unaudited, in millions)
OPERATING ACTIVITIES:
 
 
 
Net loss
$
(66
)
 
$
(43
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization expense
103

 
98

Impairment charges (a)
19

 
24

Loss on extinguishment of debt
—

 
2

Stock-based compensation expense
9

 
11

Deferred income taxes
(8
)
 
(22
)
Other, net
(2
)
 
(2
)
Change in restricted funds held in trust
3

 
(1
)
Change in working capital, net of effects of acquisitions
—

 
(36
)
Net cash provided by operating activities
58

 
31

INVESTING ACTIVITIES:
 
 
 
Purchase of property, plant and equipment
(184
)
 
(195
)
Acquisition of business, net of cash acquired
(9
)
 
(48
)
Other, net
2

 
—

Net cash used in investing activities
(191
)
 
(243
)
FINANCING ACTIVITIES:
 
 
 
Proceeds from borrowings on long-term debt
—

 
165

Proceeds from borrowings on revolving credit facility
515

 
492

Proceeds from equipment financing capital leases
—

 
15

Proceeds from borrowings on project debt
—

 
59

Proceeds from Dublin financing
77

 
45

Payments on long-term debt
(1
)
 
(163
)
Payments of borrowings on revolving credit facility
(370
)
 
(286
)
Payments of equipment financing capital leases
(2
)
 
(2
)
Payments on project debt 
(9
)
 
(57
)
Payments of deferred financing costs
(3
)
 
(6
)
Cash dividends paid to stockholders
(65
)
 
(66
)
Change in restricted funds held in trust
18

 
(6
)
Common stock repurchased
(20
)
 
—

Other, net
3

 
5

Net cash provided by financing activities
143

 
195

Effect of exchange rate changes on cash and cash equivalents
2

 
(3
)
Net increase (decrease) in cash and cash equivalents
12

 
(20
)
Cash and cash equivalents at beginning of period
96

 
91

Cash and cash equivalents at end of period
108

 
71

Less: Cash and cash equivalents of assets held for sale at end of period
—

 
5

Cash and cash equivalents of continuing operations at end of period
$
108

 
$
66

 
 
 
 
(a) For additional information, see Exhibit 4 - Note (a) of this Press Release.
 





Covanta Holding Corporation
Exhibit 4
Consolidated Reconciliation of Net Loss and Net Cash Provided by Operating Activities to Adjusted EBITDA
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited, in millions)
Net Loss Attributable to Covanta Holding Corporation
$
(29
)
 
$
(6
)
 
$
(66
)
 
$
(43
)
Depreciation and amortization expense
51

 
50

 
103

 
98

Interest expense, net
34


33

 
68

 
68

Income tax expense (benefit)
3


(40
)
 
(7
)
 
(30
)
Impairment charges (a)
4


24

 
19

 
24

Loss on extinguishment of debt
—


2

 
—

 
2

Debt service billings in excess of revenue recognized
1


—

 
2

 
1

Severance and reorganization costs
1


—

 
2

 
2

Non-cash compensation expense (b)
4


3

 
9

 
11

Capital type expenditures at service fee operated facilities (c)
12


14

 
23

 
22

Other (d)
1


3

 
5

 
7

Total adjustments
111


89


224


205

Adjusted EBITDA
$
82


$
83


$
158


$
162

Cash paid for interest, net of capitalized interest
(45
)

(42
)

(67
)
 
(61
)
Cash paid for taxes
—


(2
)

(4
)
 
(4
)
Capital type expenditures at service fee operated facilities (c)
(12
)

(14
)
 
(23
)
 
(22
)
Adjustment for working capital and other
2


(36
)

(6
)
 
(44
)
Net cash provided by (used in) operating activities
$
27

 
$
(11
)
 
$
58

 
$
31

 
 
 
 
 
 
 
 
(a) During the three months ended June 30, 2016, we recorded a non-cash impairment totaling $4 million, of which $3 million related to an investment in a joint venture to recover and recycle metals.
      During the six months ended June 30, 2016, we recorded non-cash impairment charges totaling $19 million, of which $13 million was related to the closure of our Pittsfield EfW facility in March 2017.
       During the three months ended June 30, 2015, we recorded a $24 million non-cash impairment of our biomass assets.
(b) The six months ended June 30, 2015 includes $4 million of costs incurred in connection with separation agreements related to the departure of two executive officers.
(c) Adjustment for impact of adoption of FASB ASC 853 - Service Concession Arrangements. These types of expenditures at our service fee operated facilities were historically capitalized prior to adoption of this new accounting standard effective January 1, 2015.
(d) Includes certain other items that are added back under the definition of Adjusted EBITDA in Covanta Energy, LLC's credit agreement.





Covanta Holding Corporation
Exhibit 5
Reconciliation of Cash Flow Provided by Operating Activities to Free Cash Flow
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Full  Year
Estimated 2016
 
2016
 
2015
 
2016
 
2015
 
 
(Unaudited, in millions)
 
 
Cash flow provided by (used in) operating activities
$
27


$
(11
)
 
$
58

 
$
31

 
$245 - $295
Less: Maintenance capital expenditures (a)
(32
)
 
(29
)
 
(68
)
 
(55
)
 
(105) - (115)
Free Cash Flow
$
(5
)

$
(40
)

$
(10
)

$
(24
)
 
$140 - $180
 
 
 
 
 
 
 
 
 
 
Uses of Free Cash Flow
 
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
 
 
Growth investments (b)
$
(66
)
 
$
(128
)
 
$
(125
)
 
$
(188
)
 
 
Other investing activities, net
2

 
1

 
2

 
—

 
 
Total investments
$
(64
)

$
(127
)

$
(123
)

$
(188
)
 
 
 
 
 
 
 
 
 
 
 
 
Return of capital to stockholders:
 
 
 
 
 
 
 
 
 
Cash dividends paid to stockholders
$
(32
)
 
$
(33
)
 
$
(65
)
 
$
(66
)
 
 
Common stock repurchased
—

 
—

 
(20
)
 
—

 
 
Total return of capital to stockholders
$
(32
)

$
(33
)

$
(85
)

$
(66
)
 
 
 
 
 
 
 
 
 
 
 
 
Capital raising activities:
 
 
 
 
 
 
 
 
 
Net proceeds from issuance of corporate debt (c)
$
—

 
$
2

 
$
—

 
$
2

 
 
Net proceeds from issuance of project debt (d)
—

 
15

 
—

 
15

 
 
Proceeds from Dublin financing
40

 
45

 
77

 
45

 
 
Proceeds from equipment financing capital leases (e)
—

 
6

 
—

 
15

 
 
Change in restricted funds held in trust
3

 
(15
)
 
13

 
(11
)
 
 
Other financing activities, net
(2
)
 
(1
)
 
3

 
5

 
 
Deferred financing costs
—

 
—

 
(3
)
 
(3
)
 
 
Net proceeds from capital raising activities
$
41


$
52


$
90


$
68

 
 
 
 
 
 
 
 
 
 
 
 
Debt repayments:
 
 
 
 
 
 
 
 
 
Net cash used for scheduled principal payments on corporate debt
$
(1
)
 
$
(1
)
 
$
(1
)
 
$
(1
)
 
 
Net cash used for scheduled principal payments on project debt (f)
—

 
(3
)
 
(4
)
 
(10
)
 
 
Payments of equipment financing capital leases (e)
(1
)
 
(1
)
 
(2
)
 
(2
)
 
 
Total debt repayments
$
(2
)

$
(5
)

$
(7
)

$
(13
)
 
 
Borrowing activities - Revolving credit facility, net
$
64

 
$
157

 
$
145

 
$
206

 
 
Effect of exchange rate changes on cash and cash equivalents
$
—

 
$
—

 
$
2

 
$
(3
)
 
 
Net change in cash and cash equivalents
$
2


$
4


$
12


$
(20
)
 
 
 
 
 
 
 
 
 
 
 
 
(a)  Purchases of property, plant and equipment are also referred to as capital expenditures. Capital expenditures that primarily maintain existing facilities are classified as maintenance capital expenditures. The following table provides the components of total purchases of property, plant and equipment: 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
 
2016
 
2015
 
2016

2015
 
 
Maintenance capital expenditures
$
(32
)
 
$
(29
)
 
$
(68
)
 
$
(55
)
 

Capital expenditures associated with organic growth initiatives
(8
)
 
(10
)
 
(22
)
 
(18
)
 

Capital expenditures associated with the New York City contract
(2
)
 
(6
)
 
(3
)
 
(19
)
 

Capital expenditures associated with Essex County EfW emissions control system
(8
)
 
(5
)
 
(18
)
 
(13
)
 

Capital expenditures associated with construction of Dublin EfW facility
(48
)
 
(59
)
 
(73
)
 
(90
)
 

Total capital expenditures associated with growth investments
(66
)
 
(80
)
 
(116
)
 
(140
)
 

Total purchases of property, plant and equipment
$
(98
)

$
(109
)

$
(184
)

$
(195
)
 

 
 
 
 
 
 
 
 
 
 
(b)  Growth investments include investments in growth opportunities, including organic growth initiatives, technology, business development, and other similar expenditures.
 
 
Capital expenditures associated with growth investments
$
(66
)
 
$
(80
)
 
$
(116
)
 
$
(140
)
 
 
Acquisition of business, net of cash acquired
—

 
(48
)
 
(9
)
 
(48
)
 

Total growth investments
$
(66
)

$
(128
)

$
(125
)

$
(188
)
 
 
 
 
 
 
 
 
 
 
 
 
(c)  Excludes borrowings under Revolving Credit Facility. Calculated as follows: 
 
 
Proceeds from borrowings on long-term debt
$
—

 
$
165

 
$
—

 
$
165

 
 
Refinanced long-term debt
—

 
(162
)
 
—

 
(162
)
 
 
Less: Financing costs related to issuance of long-term debt
—

 
(1
)
 
—

 
(1
)
 
 
Net proceeds from issuance of corporate debt
$
—


$
2


$
—


$
2

 
 
 
 
 
 
 
 
 
 
 
 
(d) Calculated as follows:
 
 
Proceeds from borrowings on project debt
$
—

 
$
59

 
$
—

 
$
59

 
 
Refinanced project debt
—

 
(42
)
 
—

 
(42
)
 
 
Less: Financing costs related to the issuance of project debt
—

 
(2
)
 
—

 
(2
)
 
 
Net proceeds from issuance of project debt
$
—

 
$
15

 
$
—

 
$
15

 
 
 
 
 
 
 
 
 
 
 
 
(e)  During the six months ended June 30, 2015, we financed $15 million for transportation equipment related to our contract with New York City.
 
 
 
 
 
 
 
 
 
 
 
 
(f) Calculated as follows:
 
 
 
 
 
 
 
 
 
Total scheduled principal payments on project debt
$
(1
)
 
$
(5
)
 
$
(9
)
 
$
(15
)
 
 
Decrease in related restricted funds held in trust
1

 
2

 
5

 
5

 
 
Net cash used for principal payments on project debt
$
—


$
(3
)

$
(4
)

$
(10
)
 
 





Covanta Holding Corporation
Exhibit 6
Reconciliation of Diluted Loss Per Share to Adjusted EPS
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
Diluted Loss Per Share
$
(0.23
)
 
$
(0.05
)
 
$
(0.51
)
 
$
(0.33
)
Reconciling Items (a)
0.01

 
(0.01
)
 
0.10

 
0.14

Adjusted EPS
$
(0.22
)

$
(0.06
)

$
(0.41
)

$
(0.19
)
 
 
 
 
 
 
 
 
(a) For details related to the Reconciling Items, see Exhibit 6A of this Press Release.

Covanta Holding Corporation
Exhibit 6A
Reconciling Items

 
Three Months Ended
June 30,

Six Months Ended
June 30,
 
2016

2015

2016

2015
 
(Unaudited)
(In millions, except per share amounts)
Reconciling Items
 
 
 
 
 
 
 
Impairment charges (a)
$
4

 
$
24

 
$
19

 
$
24

Severance and reorganization costs (b)
1

 
—

 
2

 
6

Loss on extinguishment of debt
—

 
2

 
—

 
2

Effect on income of derivative instruments not designated as hedging instruments
(3
)
 
—

 
1

 
—

Effect of foreign exchange (gain) loss on indebtedness
—

 
(1
)
 
(1
)
 
1

Total Reconciling Items, pre-tax
2

 
25

 
21

 
33

Pro forma income tax impact (c)
(1
)
 
(11
)
 
(8
)
 
(14
)
Legal entity restructuring charge
—

 
(15
)
 
—

 
—

Total Reconciling Items, net of tax
$
1

 
$
(1
)
 
$
13

 
$
19

Diluted Earnings Per Share Impact
$
0.01

 
$
(0.01
)
 
$
0.10

 
$
0.14

Weighted Average Diluted Shares Outstanding
129

 
132

 
129

 
132

 
 
 
 
 
 
 
 
(a) For additional information, see Exhibit 4 - Note (a) of this Press Release.
(b) For the six months ended June 30, 2015, comprised of costs incurred in connection with separation agreements related to the departure of two executive officers, of which $4 million related to non-cash compensation.
(c) We calculate the federal and state tax impact of each item using the statutory federal tax rate and applicable blended state rate. 







Covanta Holding Corporation
 
 
 
 
 
 
 
Exhibit 7A

Supplemental Information on Operations (a)
 
 
 
 
 
 
 
 
(Unaudited, $ in millions)
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2016
 
North America

 
 
 
 
EfW

Other

Total

Other

Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
Waste and service:
 
 
 
 
 
 
 
 
 
Waste processing & handling
$
238

 
$
32

 
$
270

 
$
—

 
$
270

Debt service
2

 
—

 
2

 
—

 
2

Other revenue
3

 
22

 
25

 
—

 
25

Total waste and service
243

 
54

 
297

 
—

 
297

Energy:
 
 
 
 
 
 
 
 
 
Energy sales
76

 
—

 
76

 
—

 
76

Capacity
10

 
—

 
10

 
—

 
10

Total energy revenue
86

 
—

 
86

 
—

 
86

Recycled metals:
 
 
 
 
 
 
 
 
 
Ferrous
8

 
3

 
11

 
—

 
11

Non-ferrous
5

 
1

 
6

 
—

 
6

Total recycled metals
13

 
4

 
17

 
—

 
17

Other revenue
—

 
18

 
18

 
—

 
18

Total revenue
$
342

 
$
76

 
$
418

 
$
—

 
$
418

 
 
 
 
 
 
 
 
 
 
Operating expense:
 
 
 
 
 
 
 
 
 
Plant operating expense:
 
 
 
 
 
 
 
 
 
Plant maintenance
$
80

 
$
2

 
$
82

 
$
—

 
$
82

Other plant operating expense
165

 
66

 
231

 
1

 
232

Total plant operating expense
245

 
68

 
313

 
1

 
314

Other operating expense
1

 
18

 
19

 
—

 
19

General and administrative
—

 
24

 
24

 
1

 
25

Depreciation and amortization
42

 
9

 
51

 
—

 
51

Impairment charges
—

 
4

 
4

 
—

 
4

Total operating expense
$
288

 
$
123

 
$
411

 
$
2

 
$
413


 
 
 
 
 
 
 
 
 
Operating Income (Loss)
$
54

 
$
(47
)
 
$
7

 
$
(2
)
 
$
5


 
 
 
 
 
 
 
 
 
Operating Income (Loss) excluding Impairment charges
$
54

 
$
(43
)
 
$
11

 
$
(2
)
 
$
9

 
 
 
 
 
 
 
 
 
 
(a) Supplemental information provided in order to present the financial performance of our North America EfW operations. “Other” within our North America segment includes all non-EfW operations, including transfer stations, landfills, e-waste, biomass facilities, construction and corporate overhead. This information is provided as supplemental detail only and is not intended to replace our North America reporting segment.
Note: Certain amounts may not total due to rounding






Covanta Holding Corporation
 
 
 
 
 
Exhibit 7B

Supplemental Information on Operations (a)
 
 
 
 
 
 
(Unaudited, $ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2015
 
North America

 
 
 
 
EfW

Other

Total

Other

Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
Waste and service:
 
 
 
 
 
 
 
 
 
Waste processing & handling
$
231

 
$
28

 
$
259

 
$
—

 
$
259

Debt service
4

 
—

 
4

 
—

 
4

Other revenue
3

 
9

 
12

 
1

 
13

Total waste and service
238

 
37

 
275

 
1

 
276

Energy:
 
 
 
 
 
 
 
 
 
Energy sales
73

 
7

 
80

 
9

 
89

Capacity
9

 
1

 
10

 
—

 
10

Total energy revenue
82

 
8

 
90

 
9

 
99

Recycled metals:
 
 
 
 
 
 
 
 
 
Ferrous
9

 
2

 
11

 
—

 
11

Non-ferrous
6

 
—

 
6

 
—

 
6

Total recycled metals
15

 
2

 
17

 
—

 
17

Other revenue
—

 
17

 
17

 
(1
)
 
16

Total revenue
$
335

 
$
64

 
$
399

 
$
9

 
$
408


 
 
 
 
 
 
 
 
 
Operating expense:
 
 
 
 
 
 
 
 
 
Plant operating expense:
 
 
 
 
 
 
 
 
 
Plant maintenance
$
81

 
$
4

 
$
85

 
$
—

 
$
85

Other plant operating expense
155

 
52

 
207

 
8

 
215

Total plant operating expense
236

 
56

 
292

 
8

 
300

Other operating expense
—

 
27

 
27

 
(1
)
 
26

General and administrative
—

 
20

 
20

 
3

 
23

Depreciation and amortization
40

 
8

 
48

 
2

 
50

Impairment charges
—

 
24

 
24

 
—

 
24

Total operating expense
$
276

 
$
135

 
$
411

 
$
12

 
$
423


 
 
 
 
 
 
 
 
 
Operating Income (Loss)
$
59

 
$
(71
)
 
$
(12
)
 
$
(3
)
 
$
(15
)

 
 
 
 
 
 
 
 
 
Operating Income (Loss) excluding Impairment charges:
$
59

 
$
(47
)
 
$
12

 
$
(3
)
 
$
9

 
 
 
 
 
 
 
 
 
 
(a) Supplemental information provided in order to present the financial performance of our North America EfW operations. “Other” within our North America segment includes all non-EfW operations, including transfer stations, landfills, e-waste, biomass facilities, construction and corporate overhead. This information is provided as supplemental detail only and is not intended to replace our North America reporting segment.
 
Note: Certain amounts may not total due to rounding






North America EfW
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 8
 
Revenue and Operating Income Changes - Q2 2015 to Q2 2016
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited, $ in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Same Store (a)

Contract Transitions(b)








Q2 2015

Price

%

Volume

%

Total

%

Waste

PPA

Transactions(c)

Total Changes

Q2 2016
Waste and service:

















































Waste processing

$
231


$
5


2.1
 %

$
—


0.1
 %

$
5


2.1
 %

$
(1
)

$
—


$
2


$
7


$
238

Debt service

4










—




(1
)

—


—


(2
)

2

Other revenue

3










(1
)



—


—


—


—


3

Total waste and service

238










4


1.8
 %

(2
)

—


2


5


243




























Energy:





















 

 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy sales
 
73

 
(2
)
 
-3.1
 %
 
(1
)
 
-1.7
 %
 
(4
)
 
-4.9
 %
 
6

 
—

 
—

 
3

 
76

Capacity
 
9

 

 

 

 

 
—

 
1.1
 %
 
1

 
—

 
—

 
1

 
10

Total energy revenue
 
82

 

 

 

 

 
(4
)
 
-4.3
 %
 
7

 
—

 
—

 
4

 
86

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recycled metals:





















































Ferrous

9


(3
)

-30.2
 %

1


8.3
 %

(2
)

-21.9
 %

—


—


—


(1
)

8

Non-ferrous

6


(1
)

-13.4
 %

1


9.8
 %

—


-3.7
 %

—


—


—


(1
)

5

Total recycled metals

15


(4
)

-23.7
 %

1


8.9
 %

(2
)

-14.9
 %

—


—


—


(2
)

13

Total revenue

$
335










$
(1
)

-0.4
 %

$
5


$
—


$
3


$
7


$342


























Operating expense:



















































Plant operating expense:























Plant maintenance

$
81










$
—


—
 %

$
—


$
—


$
—


$
(1
)

$
80

Other plant operating expense

155










5


3.3
 %

2


—


2


10


165

Total plant operating expense

236










5


2.2
 %

2


—


2


9


245

Other operating expense

—










1




—


—


—


1


1

Depreciation and amortization

40










2




—


—


—


2


42

Total operating expense

$
276










$
8




$
2


$
—


$
2


$
12


$
288

Operating Income (Loss)

$
59










$
(10
)



$
3


$
—


$
—


$
(5
)

$
54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Reflects the performance at each facility on a comparable period-over-period basis, excluding the impacts of transitions and transactions.
(b) Includes the impact of the expiration of: (1) long-term major waste and service contracts, most typically representing the transition to a new contract structure, and (2) long-term energy contracts.
(c) Includes the impacts of acquisitions, divestitures and the addition or loss of operating contracts.
















Note: Excludes Impairment charges
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Certain amounts may not total due to rounding




















North America
 
 
Exhibit 9

Operating Metrics (Unaudited)
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
2016
 
2015
EfW Waste
 
 
 
 
 
 
 
Tons: (in millions)
 
 
 
Contracted
4.4

 
4.4

Uncontracted
0.5

 
0.5

Total Tons
4.9

 
4.9

 
 
 
 
Revenue per Ton:
 
 
 
Contracted
$
45.87

 
$
44.72

Uncontracted
$
74.94

 
$
70.10

Average Revenue per Ton
$
48.71

 
$
47.29

 
 
 
 
EfW Energy
 
 
 
Energy Sales: (MWh in millions)
 
 
 
Contracted
0.9

 
0.8

Hedged
0.4

 
0.3

Market
0.2

 
0.4

Total Energy Sales
1.5

 
1.4

 
 
 
 
Market Sales by Geography:
 
 
 
PJM East
0.1

 
0.1

NEPOOL
—

 
0.1

NYISO
—

 
—

Other
0.1

 
0.1

 
 
 
 
Revenue per MWh (excludes capacity):
 
 
 
Contracted
$
62.06

 
$
63.69

Hedged
$
37.19

 
$
42.07

Market
$
26.02

 
$
31.43

Average Revenue per MWh
$
49.25

 
$
50.81

 
 
 
 
Metals
 
 
 
Tons Sold: (in thousands)
 
 
 
Ferrous
77

 
85

Non-Ferrous
9

 
8

 
 
 
 
Revenue per Ton:
 
 
 
Ferrous
$
138

 
$
127

Non-Ferrous
$
650

 
$
741

 
 
 
 
EfW Plant Operating Expense ($ in millions)
 
 
 
Plant Operating Expense - Gross
$
255

 
$
248

Less: Client pass-through costs
(9
)
 
(11
)
Less: REC sales - contra expense
(1
)
 
(1
)
Plant Operating Expense - Reported
$
245

 
$
236

Client pass-throughs as % of gross costs
3.6
%
 
4.4
%
 
 
 
 
Note: Waste volume includes solid tons only. Metals and energy volume are presented net of client revenue sharing. Steam sales are converted to MWh equivalent at an assumed average rate of 11 klbs of steam / MWh. Uncontracted energy sales include sales under PPAs that are based on market prices.
 
Note: Certain amounts may not total due to rounding





Discussion of Non-GAAP Financial Measures
We use a number of different financial measures, both United States generally accepted accounting principles (“GAAP”) and non-GAAP, in assessing the overall performance of our business. To supplement our assessment of results prepared in accordance with GAAP, we use the measures of Adjusted EBITDA, Free Cash Flow, and Adjusted EPS, which are non-GAAP measures as defined by the Securities and Exchange Commission. The non-GAAP financial measures of Adjusted EBITDA, Free Cash Flow, and Adjusted EPS as described below, and used in the tables above, are not intended as a substitute or as an alternative to net income, cash flow provided by operating activities or diluted earnings per share as indicators of our performance or liquidity or any other measures of performance or liquidity derived in accordance with GAAP. In addition, our non-GAAP financial measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes.
The presentations of Adjusted EBITDA, Free Cash Flow and Adjusted EPS are intended to enhance the usefulness of our financial information by providing measures which management internally use to assess and evaluate the overall performance of its business and those of possible acquisition candidates, and highlight trends in the overall business.
Adjusted EBITDA
We use Adjusted EBITDA to provide further information that is useful to an understanding of the financial covenants contained in the credit facilities as of June 30, 2016 of our most significant subsidiary, Covanta Energy, LLC, ("Covanta Energy"), through which we conduct our core waste and energy services business, and as additional ways of viewing aspects of its operations that, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of our core business. The calculation of Adjusted EBITDA is based on the definition in Covanta Energy’s credit facilities as of June 30, 2016, which we have guaranteed. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, as adjusted for additional items subtracted from or added to net income. Because our business is substantially comprised of that of Covanta Energy, our financial performance is substantially similar to that of Covanta Energy. For this reason, and in order to avoid use of multiple financial measures which are not all from the same entity, the calculation of Adjusted EBITDA and other financial measures presented herein are ours, measured on a consolidated basis.
Under the credit facilities as of June 30, 2016, Covanta Energy is required to satisfy certain financial covenants, including certain ratios of which Adjusted EBITDA is an important component. Compliance with such financial covenants is expected to be the principal limiting factor which will affect our ability to engage in a broad range of activities in furtherance of our business, including making certain investments, acquiring businesses and incurring additional debt. Covanta Energy was in compliance with these covenants as of June 30, 2016. Failure to comply with such financial covenants could result in a default under these credit facilities, which default would have a material adverse affect on our financial condition and liquidity.
These financial covenants are measured on a trailing four quarter period basis and the material covenants are as follows:
•
maximum Covanta Energy leverage ratio of 4.00 to 1.00, which measures Covanta Energy’s Consolidated Adjusted Debt (which is the principal amount of its consolidated debt less certain restricted funds dedicated to repayment of project debt principal and construction costs) to its Adjusted EBITDA (which for purposes of calculating the leverage ratio and interest coverage ratio, is adjusted on a pro forma basis for acquisitions and dispositions made during the relevant period); and

•
minimum Covanta Energy interest coverage ratio of 3.00 to 1.00, which measures Covanta Energy’s Adjusted EBITDA to its consolidated interest expense plus certain interest expense of ours, to the extent paid by Covanta Energy.
In order to provide a meaningful basis for comparison, we are providing information with respect to our Adjusted EBITDA for the three and six months ended June 30, 2016 and 2015, reconciled for each such period to net income and cash flow provided by operating activities, which are believed to be the most directly comparable measures under GAAP.
Our projected full year 2016 Adjusted EBITDA is not based on GAAP net income/loss and is anticipated to be adjusted to exclude the effects of events or circumstances in 2016 that are not representative or indicative of our results of operations. Projected GAAP net income/loss for the full year would require inclusion of the projected impact of future excluded items, including items that are not currently determinable, but may be significant, such as asset impairments and one-time items, charges, gains or losses from divestitures, or other items. Due to the uncertainty of the likelihood, amount and timing of any such items, we do not have information available to provide a quantitative reconciliation of full year 2016 projected net income/loss to an Adjusted EBITDA projection.
Free Cash Flow
Free Cash Flow is defined as cash flow provided by operating activities, less maintenance capital expenditures, which are capital expenditures primarily to maintain our existing facilities. We use the non-GAAP measure of Free Cash Flow as a criterion of





liquidity and performance-based components of employee compensation. We use Free Cash Flow as a measure of liquidity to determine amounts we can reinvest in our core businesses, such as amounts available to make acquisitions, invest in construction of new projects, make principal payments on debt, or amounts we can return to our stockholders through dividends and/or stock repurchases.
In order to provide a meaningful basis for comparison, we are providing information with respect to our Free Cash Flow for the three and six months ended June 30, 2016 and 2015, reconciled for each such period to cash flow provided by operating activities, which we believe to be the most directly comparable measure under GAAP.
Adjusted EPS
Adjusted EPS excludes certain income and expense items that are not representative of our ongoing business and operations, which are included in the calculation of Diluted Earnings Per Share in accordance with GAAP. The following items are not all-inclusive, but are examples of reconciling items in prior comparative and future periods. They would include impairment charges, the effect of derivative instruments not designated as hedging instruments, significant gains or losses from the disposition or restructuring of businesses, gains and losses on assets held for sale, transaction-related costs, income and loss on the extinguishment of debt and other significant items that would not be representative of our ongoing business.
We will use the non-GAAP measure of Adjusted EPS to enhance the usefulness of our financial information by providing a measure which management internally uses to assess and evaluate the overall performance and highlight trends in the ongoing business.
In order to provide a meaningful basis for comparison, we are providing information with respect to our Adjusted EPS for the three and six months ended June 30, 2016 and 2015, reconciled for each such period to diluted income per share, which is believed to be the most directly comparable measure under GAAP.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933 (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or in releases made by the Securities and Exchange Commission (“SEC”), all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Covanta Holding Corporation and its subsidiaries (“Covanta”) or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “will,” “would,” “could,” “should,” “seeks,” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. Covanta cautions investors that any forward-looking statements made by us are not guarantees or indicative of future performance. Important factors, risks and uncertainties that could cause actual results to differ materially from those forward-looking statements include, but are not limited to:
•
seasonal or long-term fluctuations in the prices of energy, waste disposal, scrap metal and commodities, and our ability to renew or replace expiring contracts at comparable pricing;
•
adoption of new laws and regulations in the United States and abroad, including energy laws, environmental laws, labor laws and healthcare laws;
•
our ability to avoid adverse publicity relating to our business expansion efforts;
•
advances in technology;
•
difficulties in the operation of our facilities, including fuel supply and energy delivery interruptions, failure to obtain regulatory approvals, equipment failures, labor disputes and work stoppages, and weather interference and catastrophic events;
•
failure to maintain historical performance levels at our facilities and our ability to retain the rights to operate facilities we do not own;
•
difficulties in the financing, development and construction of new projects and expansions, including increased construction costs and delays;
•
our ability to realize the benefits of long-term business development and bear the costs of business development over time;
•
our ability to utilize net operating loss carryforwards;
•
limits of insurance coverage;
•
our ability to avoid defaults under our long-term contracts;





•
performance of third parties under our contracts and such third parties' observance of laws and regulations;
•
concentration of suppliers and customers;
•
geographic concentration of facilities;
•
increased competitiveness in the energy and waste industries;
•
changes in foreign currency exchange rates;
•
limitations imposed by our existing indebtedness and our ability to perform our financial obligations and guarantees and to refinance our existing indebtedness;
•
exposure to counterparty credit risk and instability of financial institutions in connection with financing transactions;
•
the scalability of our business;
•
restrictions in our certificate of incorporation and debt documents regarding strategic alternatives;
•
failures of disclosure controls and procedures and internal controls over financial reporting;
•
our ability to attract and retain talented people;
•
general economic conditions in the United States and abroad, including the availability of credit and debt financing; and
•
other risks and uncertainties affecting our businesses described in Item 1A. Risk Factors of Covanta's Annual Report on Form 10-K for the year ended December 31, 2015 and in other filings by Covanta with the SEC.
Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this press release are made only as of the date hereof and we do not have, or undertake, any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.




NYSE: CVA July 26, 2016 Second Quarter 2016 Earnings Conference Call

 
July 26, 2016 2 Cautionary Statements All information included in this earnings presentation is based on continuing operations, unless otherwise noted. Forward-Looking Statements Certain statements in this press release constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933 (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or in releases made by the Securities and Exchange Commission (“SEC”), all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Covanta Holding Corporation and its subsidiaries (“Covanta”) or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “will,” “would,” “could,” “should,” “seeks,” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. Covanta cautions investors that any forward- looking statements made by us are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to Covanta, include, but are not limited to, the risk that Covanta may not successfully grow its business as expected or close its announced or planned acquisitions or projects in development, and those factors, risks and uncertainties that are described in periodic securities filings by Covanta with the SEC. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this press release are made only as of the date hereof and we do not have, or undertake, any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law. Note: All estimates with respect to 2016 and future periods are as of July 26, 2016. Covanta does not have or undertake any obligation to update or revise any forward- looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law. Non-GAAP Financial Measures We use a number of different financial measures, both United States generally accepted accounting principles (“GAAP”) and non-GAAP, in assessing the overall performance of our business. The non-GAAP financial measures of Adjusted EBITDA, Free Cash Flow and Adjusted EPS, as described and used in this earnings presentation, are not intended as a substitute or as an alternative to net income, cash flow provided by operating activities or diluted earnings per share as indicators of our performance or liquidity or any other measures of performance or liquidity derived in accordance with GAAP. In addition, our non-GAAP financial measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The presentations of Adjusted EBITDA, Free Cash Flow and Adjusted EPS are intended to enhance the usefulness of our financial information by providing measures which management internally use to assess and evaluate the overall performance of its business and those of possible acquisition candidates, and highlight trends in the overall business. Please refer to the appendix of this presentation for reconciliations of non-GAAP financial measures.

 
July 26, 2016 3 Q2 2016 Summary (in millions, except Adjusted EPS) Q2 2015 Q2 2016 FY 2016 Guidance (1) Revenue $408 $418 N/A Adjusted EBITDA $83 $82 $390 - $430 Cash flow (used in) provided by operating activities $(11) $27 N/A Free Cash Flow $(40) $(5) $140 - $180 Diluted Loss Per Share $(0.05) $(0.23) N/A Adjusted EPS $(0.06) $(0.22) N/A (Unaudited) • Positive trends in waste and metals pricing from initial guidance • Heavy maintenance season completed – spend consistent with expectations • Extended lease for our Union County facility by 22 years through 2053 • Reaffirming 2016 full-year guidance 1) Reaffirmed guidance as of July 26, 2016.

 
July 26, 2016 4 Waste Update North America EfW (1) (in millions, except price) Q2 2015A Q2 2016A 2016E Waste & Service Revenue: Waste Processing $231 $238 $935 - $965 Debt Service 4 2 9 Other (2) 3 3 5 - 10 Total $238 $243 $950 - $980 Tons: (3) Contracted (4) 4.4 4.4 Uncontracted 0.5 0.5 Total 4.9 4.9 19.5 - 19.7 Revenue per Ton: (5) Contracted $44.72 $45.87 Uncontracted $70.10 $74.94 Average $47.29 $48.71 $48.00 - $49.00 • Q2 2016 EfW waste processing revenue vs. Q2 2015: ▪ Same store price up $5 million (2.1%); volume flat ▪ EfW profiled waste up 9% year-over-year • Trends and outlook: ▪ Uncontracted price improvement driven by strong Northeast price environment and continued mix shift away from low-priced spot MSW ▪ Contractual price escalations running at ~1% 1) North America EfW results include only Energy-from-Waste assets. 2) Other includes service revenue not directly related to waste processing. 3) Excludes liquid waste. (Unaudited) 4) Includes contracts at transfer stations from which waste is internalized. 5) Calculated for waste and service revenue, excluding debt service and other revenue.

 
July 26, 2016 5 Energy Update North America EfW (in millions, except price) Q2 2015A Q2 2016A 2016E Energy Revenue: Energy Sales $73 $76 $310 - $330 Capacity 9 10 ~40 Total $82 $86 $350 - $370 MWh Sold: Contracted 0.8 0.9 3.1 - 3.2 Hedged 0.3 0.4 ~1.9 Market 0.4 0.2 ~1.1 Total 1.4 1.5 6.2 - 6.4 Revenue per MWh: (1) Contracted $63.69 $62.06 ~$64 Hedged $42.07 $37.19 ~$41 Market $31.43 $26.02 ~$29 Average $50.81 $49.25 ~$51 • Q2 2016 EfW energy revenue drivers vs. Q2 2015: ▪ Same store revenue down 4.3% ◦ Price down $2 million ◦ Volume down $1 million • Trends and outlook: ▪ Recent recovery in natural gas prices not fully translating to Northeast electricity market pricing ▪ Warm weather and lower gas production modestly improving forward price outlook ▪ Remaining uncontracted exposure in 2016 approximately 600k MWh ▪ Hedging exposure in 2017 and 2018 ◦ Market exposure in 2017 and 2018 down to 1.9 and 4.2 million MWh, respectively, and will continue to decrease ◦ Average hedge price for 2017 is approximately $36 per MWh 1) Excludes capacity revenue. (Unaudited)

 
July 26, 2016 6 Recycled Metals Update North America ($ in millions, except price; tons in thousands) Q2 2015A Q2 2016A 2016E Metals Revenue: Ferrous $11 $11 $30 - $35 Non-Ferrous 6 6 20 - 25 Total $17 $17 $50 - $60 Tons Sold: Ferrous 85 77 330 - 340 Non-Ferrous 8 9 34 - 38 Revenue per Ton: Ferrous $127 $138 $95 - $110 Non-Ferrous $741 $650 ~$650 Average HMS index price (1) $236 $220 $175 - $195 • Q2 2016 revenue drivers vs. Q2 2015: ▪ Volume: ◦ Ferrous down 10% – recovery up, but sales volume impacted by centralized processing and timing of shipments ◦ Non-ferrous up 14% ▪ Price: ◦ Ferrous up 8%, with lower market price more than offset by higher realized revenue as % of index ◦ Non-ferrous down 12% • Market trends and outlook: ▪ Recent strength in both ferrous and non-ferrous markets; however, expect softness for rest of 2016 due to seasonality of scrap market and strong USD 1) Q2 2016 and Q2 2015 average #1 Heavy Melt Steel composite index ($ / gross ton) as published by American Metal Market. (Unaudited)

 
July 26, 2016 7 Plant Operating Expense and Maintenance Capex Update • Q2 2016 summary: ▪ North America EfW plant maintenance expense flat vs. Q2 2015 on same store basis ▪ North America EfW other plant operating expenses up 3% vs. Q2 2015 on same store basis • Trends and outlook: ▪ 2016 full-year maintenance plan on track; ~65% of maintenance spend completed Total Company (in millions) Q2 2015A Q2 2016A 2016E Plant Maintenance Expense: North America EfW $81 $80 $265 - $275 Other 4 2 Total $85 $82 Maintenance Capex: North America EfW $26 $28 $85 - $95 Other 3 4 ~20 Total $29 $32 $105 - $115 Total EfW Maintenance Spend $107 $108 $350 - $370 Other Plant Operating Expense: North America EfW $155 $165 Other 60 67 Total $215 $232 (Unaudited)

 
July 26, 2016 8 Financial Overview

 
July 26, 2016 9 Revenue: Q2 2016 vs. Q2 2015

 
July 26, 2016 10 Adjusted EBITDA: Q2 2016 vs. Q2 2015

 
July 26, 2016 11 Free Cash Flow: Q2 2016 vs. Q2 2015

 
July 26, 2016 12 Growth Investment Outlook Growth Investments (Unaudited, in millions) FY 2015 Actual YTD 6/30/16 FY 2016 Outlook Organic growth investments (1) $34 $22 ~ $40 New York City contract 30 3 ~5 Essex County EfW emissions control system (2) 26 18 ~35 Acquisitions 72 9 9 Subtotal: Corporate funded $162 $52 ~ $90 Dublin facility construction 184 73 175 - 200 Total growth investments $346 $125 ~ $265 - 295 1) Organic growth programs are focused primarily on growing waste and metal revenue. 2) Classified as growth investment because cost is reflected in overall economic benefit of contract restructuring completed in 2013. • Remaining Dublin investment to be funded entirely with project financing – no impact on domestic capital allocation • Acquisitions to be targeted on an opportunistic basis – potential additional activity not reflected in FY 2016 outlook

 
July 26, 2016 13 Capitalization Summary 1) Net debt is calculated as total principal amount of debt outstanding less cash and cash equivalents, debt service principal-related restricted funds ($13 million at June 30, 2016), and escrowed construction financing proceeds ($48 million at June 30, 2016). 2) Excludes $128 million of net debt (debt of $137 million less restricted funds of $9 million) outstanding at June 30, 2016 at Dublin project subsidiary. 3) Leverage ratio as calculated for senior credit facility covenant. Effectively represents leverage at Covanta Energy, LLC and subsidiaries. (Face value; unaudited, in millions) 12/31/2014 12/31/2015 6/30/2016 Cash and Cash Equivalents $84 $94 $108 Corporate Debt: Secured $405 $621 $763 Unsecured 1,569 1,664 1,664 Total Corporate Debt $1,974 $2,285 $2,427 Project Debt 225 197 372 Total Debt $2,199 $2,482 $2,799 Net Debt (1) $2,029 $2,326 $2,630 Stockholders’ Equity $784 $640 $480 Credit Ratios: Net Debt / Adjusted EBITDA Ratio 4.3x 5.4x 6.2x Excluding Non-Recourse Construction Debt (2) 4.3x 5.3x 5.9x Senior Credit Facility Leverage Ratio (3) 2.1x 2.9x 3.4x

 
July 26, 2016 14 Appendix

 
July 26, 2016 15 Long-term Outlook: Debt Service Revenue Project Debt Repayment (Unaudited, in millions): 2008–2015 2016 2017 2018 2019 2020 Beyond 2020 Total Principal Payments (2) $909 $16 $17 $18 $13 $2 $75 Total Change in Principal-Related Restricted Funds (193) — — (5) (9) — (1) Net Cash Used for Project Debt Principal Repayment $716 $16 $17 $13 $4 $2 $74 Client Payments for Debt Service: (Unaudited, in millions) 2008–2015 2016 2017 2018 2019 2020 Beyond 2020 Debt Service Revenue – Principal $352 $6 $6 $5 $3 $3 $39 Debt Service Revenue – Interest 98 4 3 3 2 2 16 Debt Service Billings in Excess of Revenue Recognized 106 4 5 (1) (1) (1) 4 Client Payments for Debt Service (1) $556 $14 $14 $7 $4 $4 $60 Net Change in Debt Service Billings per Period $(108) $(1) $— $(7) $(3) $— $— 1) Related to Service Fee facilities only. 2) Excludes payments associated with Union capital lease. Note: North American operations only. Excludes payments related to project debt refinancing.

 
July 26, 2016 16 Long-term Outlook: Energy Detail North America EfW Facilities (Unaudited, in millions, except price) 2014A 2015A 2016E 2017E 2018E 2019E 2020E MWh Sold – CVA Share: Contracted 3.2 3.0 3.2 2.4 2.1 2.1 2.1 Hedged 1.4 1.4 1.9 2.2 0.2 — — Market 1.1 1.4 1.1 1.9 4.2 4.5 4.5 Total MWh Sold 5.6 5.8 ~6.2 ~6.5 ~6.5 ~6.6 ~6.6 Market Sales (MWh) by Geography: PJM East 0.4 0.5 0.5 1.0 2.4 2.7 2.7 NEPOOL 0.3 0.3 0.1 0.4 1.1 1.1 1.1 NYISO — 0.1 0.1 0.1 0.2 0.2 0.2 Other 0.3 0.4 0.4 0.4 0.5 0.5 0.5 Total Market Sales 1.1 1.4 1.1 1.9 4.2 4.5 4.5 Revenue per MWh: (1) Contracted $67.56 $65.56 ~$64 Average ~$57 / MWh on contracts expiring through 2020 Hedged $42.87 $45.64 ~$41 Market $49.12 $33.18 ~$29 Average Revenue per MWh $58.06 $53.17 ~$51 Note: hedged generation as presented above reflects only existing hedges. 1) Excludes capacity revenue. • Note: Production estimates for 2017 - 2020 are approximated based on historical operating performance and expected contract structures

 
July 26, 2016 17 Non-GAAP Reconciliation: Adjusted EBITDA & Free Cash Flow Q2 YTD Full Year (Unaudited, in millions) 2016 2015 2016 2015 Estimated 2016 (1) Net Loss Attributable to Covanta Holding Corporation $(29) $(6) $(66) $(43) Depreciation and amortization expense 51 50 103 98 Interest expense, net 34 33 68 68 Income tax expense (benefit) 3 (40) (7) (30) Impairment charges 4 24 19 24 Loss on extinguishment of debt — 2 — 2 Debt service billings in excess of revenue recognized 1 — 2 1 Severance and reorganization costs 1 — 2 2 Non-cash compensation expense 4 3 9 11 Capital type expenditures at service fee operated facilities (2) 12 14 23 22 Other 1 3 5 7 Total adjustments 111 89 224 205 Adjusted EBITDA $82 $83 $158 $162 $390 - $430 Cash paid for interest, net of capitalized interest (45) (42) (67) (61) Cash paid for taxes — (2) (4) (4) Capital type expenditures at service fee operated facilities (2) (12) (14) (23) (22) Adjustment for working capital and other 2 (36) (6) (44) Cash flow provided by (used in) operating activities from continuing operations $27 $(11) $58 $31 $245 - $295 Maintenance capital expenditures (32) (29) (68) (55) (105) - (115) Free Cash Flow $(5) $(40) $(10) $(24) $140 - $180 Weighted Average Diluted Shares Outstanding 129 132 129 132 1) Guidance affirmed as of July 26, 2016. 2) Adjustment for impact of adoption of FASB ASC 853 – Service Concession Arrangements.

 
July 26, 2016 18 Non-GAAP Reconciliation: Adjusted EBITDA Full Year LTM (Unaudited, in millions) 2014 2015 6/30/2016 Net (Loss) Income Attributable to Covanta Holding Corporation $(2) $68 $45 Operating loss related to insurance subsidiaries 2 — — Depreciation and amortization expense 211 198 203 Debt service expense 147 134 134 Income tax expense (benefit) 15 (84) (61) Impairment charges 64 43 38 Loss on extinguishment of debt 2 2 — Net income attributable to noncontrolling interests in subsidiaries 1 1 1 Debt service billings in excess of revenue recognized 2 1 2 Severance and reorganization costs 9 4 4 Non-cash compensation expense 17 18 16 Capital type expenditures at service fee operated facilities (1) — 31 32 Other 6 12 10 Total adjustments 476 360 379 Adjusted EBITDA $474 $428 $424 1) Adjustment for impact of adoption of FASB ASC 853 – Service Concession Arrangements. Note: Adjusted EBITDA results provided to reconcile the denominator of the Net Debt / Adjusted EBITDA ratios on slide 13.

 
July 26, 2016 19 Non-GAAP Reconciliation: Adjusted EPS Q2 YTD (Unaudited, in millions, except per share amounts) 2016 2015 2016 2015 Diluted Loss Per Share $(0.23) $(0.05) $(0.51) $(0.33) Reconciling Items 0.01 (0.01) 0.10 0.14 Adjusted EPS $(0.22) $(0.06) $(0.41) $(0.19) Reconciling Items Impairment charges $4 $24 $19 $24 Severance and reorganization costs 1 — 2 6 Loss on extinguishment of debt — 2 — 2 Effect on income of derivative instruments not designated as hedging instruments (3) — 1 — Effect of foreign exchange (gain) loss on indebtedness — (1) (1) 1 Total Reconciling Items, pre-tax 2 25 21 33 Pro forma income tax impact (c) (1) (11) (8) (14) Legal entity restructuring charge — (15) — — Total Reconciling Items, net of tax $1 $(1) $13 $19 Diluted Earnings Per Share Impact $0.01 $(0.01) $0.10 $0.14

 
July 26, 2016 20 Non-GAAP Financial Measures Free Cash Flow Free Cash Flow is defined as cash flow provided by operating activities, less maintenance capital expenditures, which are capital expenditures primarily to maintain our existing facilities. We use the non- GAAP measure of Free Cash Flow as a criterion of liquidity and performance-based components of employee compensation. We use Free Cash Flow as a measure of liquidity to determine amounts we can reinvest in our core businesses, such as amounts available to make acquisitions, invest in construction of new projects, make principal payments on debt, or amounts we can return to our stockholders through dividends and/or stock repurchases. In order to provide a meaningful basis for comparison, we are providing information with respect to our Free Cash Flow for the three and six months ended June 30, 2016 and 2015, reconciled for each such period to cash flow provided by operating activities, which we believe to be the most directly comparable measure under GAAP. Adjusted EBITDA We use Adjusted EBITDA to provide further information that is useful to an understanding of the financial covenants contained in the credit facilities as of June 30, 2016 of our most significant subsidiary, Covanta Energy, LLC ("Covanta Energy"), through which we conduct our core waste and energy services business, and as additional ways of viewing aspects of its operations that, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of our core business. The calculation of Adjusted EBITDA is based on the definition in Covanta Energy’s credit facilities as of June 30, 2016, which we have guaranteed. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, as adjusted for additional items subtracted from or added to net income. Because our business is substantially comprised of that of Covanta Energy, our financial performance is substantially similar to that of Covanta Energy. For this reason, and in order to avoid use of multiple financial measures which are not all from the same entity, the calculation of Adjusted EBITDA and other financial measures presented herein are ours, measured on a consolidated basis. Under the credit facilities as of June 30, 2016, Covanta Energy is required to satisfy certain financial covenants, including certain ratios of which Adjusted EBITDA is an important component. Compliance with such financial covenants is expected to be the principal limiting factor which will affect our ability to engage in a broad range of activities in furtherance of our business, including making certain investments, acquiring businesses and incurring additional debt. Covanta Energy was in compliance with these covenants as of June 30, 2016. Failure to comply with such financial covenants could result in a default under these credit facilities, which default would have a material adverse affect on our financial condition and liquidity. These financial covenants are measured on a trailing four quarter period basis and the material covenants are as follows: • maximum Covanta Energy leverage ratio of 4.00 to 1.00, which measures Covanta Energy’s Consolidated Adjusted Debt (which is the principal amount of its consolidated debt less certain restricted funds dedicated to repayment of project debt principal and construction costs) to its Adjusted EBITDA (which for purposes of calculating the leverage ratio and interest coverage ratio, is adjusted on a pro forma basis for acquisitions and dispositions made during the relevant period); and • minimum Covanta Energy interest coverage ratio of 3.00 to 1.00, which measures Covanta Energy’s Adjusted EBITDA to its consolidated interest expense plus certain interest expense of ours, to the extent paid by Covanta Energy. In order to provide a meaningful basis for comparison, we are providing information with respect to our Adjusted EBITDA for the three and six months ended June 30, 2016 and 2015, reconciled for each such period to net income and cash flow provided by operating activities, which are believed to be the most directly comparable measures under GAAP. Our projected full year 2016 Adjusted EBITDA is not based on GAAP net income/loss and is anticipated to be adjusted to exclude the effects of events or circumstances in 2016 that are not representative or indicative of our results of operations. Projected GAAP net income/loss for the full year would require inclusion of the projected impact of future excluded items, including items that are not currently determinable, but may be significant, such as asset impairments and one-time items, charges, gains or losses from divestitures, or other items. Due to the uncertainty of the likelihood, amount and timing of any such items, we do not have information available to provide a quantitative reconciliation of full year 2016 projected net income/loss to an Adjusted EBITDA projection. Adjusted EPS Adjusted EPS excludes certain income and expense items that are not representative of our ongoing business and operations, which are included in the calculation of Diluted Earnings Per Share in accordance with GAAP. The following items are not all-inclusive, but are examples of reconciling items in prior comparative and future periods. They would include impairment charges, the effect of derivative instruments not designated as hedging instruments, significant gains or losses from the disposition or restructuring of businesses, gains and losses on assets held for sale, transaction-related costs, income and loss on the extinguishment of debt and other significant items that would not be representative of our ongoing business. We will use the non-GAAP measure of Adjusted EPS to enhance the usefulness of our financial information by providing a measure which management internally uses to assess and evaluate the overall performance and highlight trends in the ongoing business. In order to provide a meaningful basis for comparison, we are providing information with respect to our Adjusted EPS for the three and six months ended June 30, 2016 and 2015, reconciled for each such period to diluted income per share, which is believed to be the most directly comparable measure under GAAP.

 

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