CVA - Earnings call transcript Q4 2018

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Operator

Good morning everyone, and welcome to Covanta Holding Corporation's Fourth Quarter and Full-Year 2018 Financial Results Conference Call and Webcast. An archived webcast will be available two hours after the end of the conference call, and can be accessed through the Investor Relations section of the Covanta website at www.covanta.com. A transcript will also be archived on the company's website. At this time, for opening remarks and introductions, I'd like to turn the call over to Dan Mannes, Covanta's Vice President of Investor Relations. Please go ahead.

Dan Mannes

good and Emily you, morning everyone. Thank Covanta's call. to fourth quarter conference XXXX year full and Welcome

on call our me and Joining the CEO; our Steve and President Jones, Brad Helgeson, CFO. today will be

and We will and take questions. your update, our financial then business provide results, review operational an

comments, section Brad or slides Those Relations During the our we accessed referencing now that the These should will can certain call prepared Investor call. their in be prepared to of supplement this be website, www.covanta.com. listened slides after on slides. prepared conjunction of the Steve and audio portion remarks these with be to

do of law. in redistribution, the information or not not prepared includes should forward-looking been of in considered be update financial Information this in to form these rebroadcast this is any found content the accurate call the to with The statements Company's presented are Covanta factors measures such cause can information consent and which on following registration actual measures. XXXX. from have that discussions that time-sensitive be other U.S. Any non-GAAP of isolation is contain GAAP. Because and differences broadcast, Safe the Now, financial expectations. this GAAP, in the with not calculated preliminary prohibited. express our retransmission of only notes; filed SEC. materially with required they the We regarding Harbor statements, reports and unless accordance our accordance differ results live conference could statements as forward-looking February in written may may contains assume those without any information obligation XX, from call by of our date The

Jones. like how usefulness on last to to comparative which of call the our I'd issued information we now was release over With their well Steve please night as and regarding and From-XK. more limitations our furnished the and purposes, for SEC see to For press as turn Steve? to President use our measures that, non-GAAP CEO, them, definitions was

Steve Jones

morning good and Dan, everyone. Thanks,

web came Slide flow turn EBITDA performance, $XXX to For of the million We cash free top guidance year. our to million you strong using minute them the XXXX those product dedication This team's finished end the this in a deck, which generating of of for adjusted is and in take and for at a please the work want $XXX ranges of great hard X. to of performance. I and thank

of million $XXX adjusted in range cash free expect flow million we and to XXXX EBITDA $XXX million. the to $XXX For $XXX of million

the flat As QX for adjusted we discussed on EBITDA call, XXXX. roughly our outlook to is

a of X. And the review the and bearing million waste, more the perspective processed We operations, improvement. records performance flow addition business have recovered doubled six teams in year business of what end the improvement course history of the we year operating our of more generated which the the However, a the Slide of significant process will of a initiatives records credit two more and facilities Beach record demonstrates how to any Palm From proceeds discuss set cash large company. strategic fruit. different now in at than I'll year, is metals of other and range plants are processing actually a the board. some we please the XX.X the free towards and turn full continuous range to reflecting normalizing detail, energy highlights, year. We a for tons a for nice when received in the adjusted Brad timing underlying as XXXX. in trend midpoint EBITDA growth of across more guidance that year-over-year seemingly represents We reflects interruption key

we plants the safest given in while same the in set of records production higher XX% go believe throughput more had also incidents from Energy plant the Beach. waste saw that from see safety Palm hand you'll that performance and contribution expect year the reduction of hand performance in XXXX even operational in year-over-year. full and We year in We XXXX the the company. history with

for Our total rate is history. Safety number incident future. in the is total day we'll the the do to measure is zero case of and fantastic at in every level the we hours the to accomplishment. what company's of worked was continue about which This incidents lowest incidents strive a

centers. end and I've X% options to to our decreasing with costs be dent population become itself is the in waste primary Disposal escalators in to even our rising for this sustainable getting a running manifests tip are are in plants known up time which pricing company. many improved say, waste market of and price are is This transportation which Our with contract share same-store a majority as disposal is to of fee proximate a XXXX. good markets more under our is closer to the that occurring big fair waste we're X.X% it's X.X%. Remember as prices and

that and years. We contracts totaling those we ways XXXX for client with own negotiations In continue of run we're positive at extended fee service and perspective, pricing in push five an to forward have million both XXXX service for active are in expect we three performance to two outcomes expiring similar pricing. reaching to X.X contracts. we From plants currently client communities that contracts during XXXX average there duration and believe a substantial tons look

Beyond that, service we contract have don’t another XXXX. expiration until

up. is portfolio segment this So our locked of well

the energy in continues plant profile profits grew Solutions in Environmental processing waste facilities our internalization a from was the waste. CES material our grow of XX% from XX% growth of for the in regulated to Covanta XXXX. and fleet, to This product another growth diversification across and value waste profile higher business Revenue fair waste nicely. prudent medical Our or outlets

our margins. dramatically of than total represents XX% less internalized waste, quickly offers growing While is this profile waste higher it stream and still

the regulated waste permits adding XXXX plant up expand in at waste to We to other ramp to plants permitted we by At facilities expect we in medical third to single in revenue streams environmental to in by growth leverage coming service the plan for and processing digit years. further XXXX revenue these look handle mid continue XXXX. grew our we capacity and our assets X% mature these other

City We're fully for facility Niagara sites. Lastly, In York a additional city with to waste annually Delaware of our our to the disposal. quarter. sustainable and partner roughly the forward to ultimate look City we will in to term start York to the New New up provide is expect once in we second transfer continue tons Manhattan collected energy of the long XXX,XXX the station for manage Valley at proud receive and third operational, solution an all processing by waste total, one waste plants the from into system now marine

rated is even this volatility. and XXXX snap record entered subdued year As production better translated hedges realized That had improvements and XXXX. with plants manage limited energy for energy said, record and you downtime goal prices cold XXXX. waste expect, in hedged the recent in well than We energy better we to than slightly have modest remained our With and would into throughput a revenue. expected energy in risk prices market primary

a of with maturities have contract no excellent hedged. the nearly long XXXX. revenue perspective, term year, until visibility is XX% forecasted already material contract energy For the we From contracted or

quarters, in noted the capacity we from on three lower years will XXXX auction As ago. payments based be prior results in

premium to similar opportunities also for the pricing future highlight improve is we explore energy from and prices locations next have outlook our in capacity three years. Our to this realized continue area. levels its either more quarters to attributes in And expect of or for two green to to from

increase setting processing another Adjusted recovery record we performance for for We tons recovered revenue of in recovered XXXX metal over a continue capabilities to yet representing in XXXX. over our advance client and XXX,XXX sharing, metals and X% volumes.

stories changes Index continue over XXXX $XXX complex more in resulting a maximize imported the opportunities have to material We how reacted production relative and recovery, this per continue on through ForEx in been a and stability prices minimize to steel ton and policy Prices as by the favorable dictating in forces soften as China. our for The thus impacted have steel supported nonferrous on and demand business. tariffs we likely has year have side in facilities. declined find have at nonferrous bit for the for aluminum market are environment averaged volatility been prices overall metal softened Tariffs Nonferrous been domestic to we the of particularly value. HMS selective due a to to demand additions scrap media while ferrous [indiscernible]. bit for expect to and products equipment prices different increase in new for XXXX, has

separation the found low and to our higher via to However, products and total team persistently in prices we be successfully value nonferrous aluminum scrap for has scrap XXXX. prices add historic revenues expect ways to realized improved

often metals. are have much exposure prices we how We for to really market will asked,

per So HMS at I'd the ferrous, is some $XXX to like ton On nearly average. provide the of approximately context. XX-year current

revenue to we already that either $X have $X highs impact $XX basis million HMS approximately million implying gap] $XX a number would represent to at a move a the While or this to have estimate to saw isn’t an correlate historical of of movements or exact downside. products, ton in million most to bottomed. lows on we science, annual [audio lows and per nonferrous, that XX-year $XX upside are to appear On million but aluminum an

from are in the or revenue million for move So $X and more million $X positively we upside to potential around see annually average prices prices would levels. XX-year slightly negatively. per Copper than likely below impact at pound $X.XX by copper current downside

multiple as volume. of and diversified do the One and expect began we forward. value for half. quality a half XXXX. end Processing going we'll efforts increased material commission refer that likely is we our contribution Earlier constructing to our of it. geographic more this These metals metals first exposure our Total second the doable of line year and product and it first our program across year a the of while Ash most make is markets we in us System in Construction to TAPS metal of business take or we financial We not the benefits

first this this several excited facilities. metal we and increase the very of disposal hope such potential and and cost hauling that is our to However, ash are recovery about reduce

first through working that the operations. construction While systems once could the work for we're sites other and sense in additional the in make first develop commissioning parallel we to is in facility fleet location,

was the as prior On maintenance year. compared the our less up X% to top plant spend waste than of total energy maintenance, from in the XXXX

spend and maintenance Palm in year and Palm inflation the Even for the we facilities. adjusted else similar with plans line trajectory This or is level the equal, Beach are is type expect of total rate large to continue our XXXX we Dublin at inflation the time and EfW in unchanged. on for plus previously minus. to is discussed All overall plants, the as full over an outlook impact Beach increase spend long-term maintenance

maintenance As of routine and is we reinvestment fleet. we plants discussed appropriate to that maintenance composition and for our continue the of is to to both, level at long-term facet cover ensure performance size our asset current and peak One of risks will to managing managing activity costs our run decades see come. as

Beach the opportunities we'd appropriate to going You've with profit These a represents great successfully been changes. footprint, our City began amended gotten efforts agreements facilities and revenue like start with hearing this facilities risk how take client are for the for we've new Long for upside want In our agreement fit facility by those I some that into term off perfectly and tangible structure improvement model new lower XXXX existing the a of We action me new yield offer arrangement with well on client, to forward. to in attractive and from and a reinvestment the client. opportunities. allocation, Palm to long operating Beach, Florida shared large time for

down planned in case Jersey operations no at but it risk the already XXXX facility. this is this to right a reward County, there's of facility there. decision, Warren difficult a decision, New so Shutting a We've is change the decision standpoint. announced from During we [indiscernible] second

and sourcing sale strategic for noncore invested of longer while improve represent returns operations as assets we're Lastly, our ways as a and during to facilities pursuing the to XXXX and be capital in assets that from done represent our hands that were transfer of the hear companies. on waste other many are the operations, hydro us we our to we're three transfer we look at value redeploy close signed critical waste greater on move more we the yet. this other the There elsewhere. of topic of higher component in To these to improvement. multiple for economics assets Note facilities not clear, Expect stations need paths stations, overall XXXX. to no

year output like waste I'd of agreements. the we've have generate that metric of announced say to because of Finally, we power December Located secured the process to our will is approximately Energy municipalities financial progress and contracted this equivalent long majority energy per megawatts will Scotland, the and haulers, waste while serve on UK made power. facility's megawatts close and late XXX,XXX XX.X Grangemouth, the term Earls discuss plant with equivalent I the under local steam. both is The capacity Gate tons Gate we In pipeline. Center. Earls of reached in

and be UK moving our extremely investment forward. expect the to facility late service to excited by project have We XXXX we're in first

the prior the that process We our court XXXX. England, November. the local the thorough to permit the Bedfordshire, in expect with a and commence much is close the of strong Therefore the to the we group out end any agency's play agree this. process without the legal this merit course environmental process. challenge of infrastructure event, issue we of needed advice of the high opposition and challenge the The now operate. denied position this an financial whether plant issuance appealing pursuing rights appeals to decision this project view over of to in to court Regarding Rookery the operating to not is have very to we will we're as only, supporting options proceed and received construction In

partnership a with Gate look The investments and to projects excitement end investor running our term to We discuss along to plan. well-founded. to into strategic long-term call keeping in bury draft we with progress annually. generate UK total it greater towards Protos continue expect XX-day our then plan in million reach construction in XXXX be the the our financial is to three once Our in the I I'll hand international judicial move operations following for the also to the both updated an The and standard detail. Newhurst With in to well. Protos We that, period. permit to We project million the $XX I Earls the all just by over in permit community to you subject development Biffa, to make Newhurst and which In the to close two has be consultation. awaits application the of critical UK outlook progresses. for execution additional forward the in operating in $XX and financial say projects expect review cleared expect received pipeline as comments advanced financial of made be position past, will as to continued I've growth long Brad will move existing cases to we these results the close cash permit, in around XXXX. project of our consider

Brad Helgeson

Good a prices operations the now begin financial performance the revenue an Steve. on at impact to impact our $X fee strong lower of million the up billion was slightly a accounted $X.XX impact year metals Commodity with benefit on from same-store prices plant growth, year, with a production Organic revenue of partially the Fairfax review million we for waste everyone. X.X% X. Thanks, of offset the prices of including or as compared modestly $XXX growth index full with prices stronger tip energy increase. with Slide net excluding EfW under morning with compared by nonferrous in and I'll environment from Record prices million drove hedges majority of improvement. positive for lower of outweighing ferrous XXXX. commodities with Total floors and had as a price and contracts X.X% caps to $X softness saw XXXX.

Dublin discussed $XX net added the of operations reduction facility to headwind. service contribution power Over transitions million to acquired million the and a while year previously the legacy $XX for represented year newly the in Beach million of a the of incremental Long earlier term QX generated contract year. a net the revenue Palm course XXXX, contributed of this transition contract revenue as operator expiration of client another $XX a its

$XX Moving range on was EBITDA million XXXX to exceeding Slide adjusted million X, increase an $XXX of in guidance representing and our year-over-year.

organically, $XX again by business production relating and fire grew the during XXXX inclusion adjusted by strong the eruption plant Excluding million $XX particularly EBITDA in to of in Fairfax insurance commodity at XXXX. million driven and proceeds prices,

project which and from year-over-year on settlement EBITDA that the XX% to prices transitions of headwind eruption half XXXX ferrous grew power JV ownership over we trampolated X% metal adjusted adjusted legacy revenue whilst of incremental XXXX million adjusted before services facility organically EBITDA from expiration balance EBITDA in from year client of projects as benefit net EBITDA the prices comprised $XX O&M of company. related lower received basis headwind most and target. annual line. the the a I a discussed, in to X% which in from The represented of the to just organic benefit insurance our we both and energy of Excluding a $XX debt and [ph] contract contributed X% surpassing relating service directly with the The proportion the growth business million by adjusted our contractual commodities to in client our payments. the Contract Dublin the benefit

in guidance our was range of with X, in a the to The million represented net the million compared $XX end cash the headwind $XXX to for flow cash which free was $XX driver change basis million compared to cash Turning million $XXX primary XXXX million in of top year. year-over-year $XX capital XXXX. Slide outflow flow the benefit a at a on prior working year a

growth guidance anticipated we use the in our days back outflow for reduction a $XX cash five-day capital when into this to $XX receivable was million but as million partially in working project CapEx outstanding. driven Dublin the flow initially sort year-over-year, distribution in by higher collection capital working that's driving first very here. in from $XX adjusted cash set underlying discussed This sales going story strong net a EBITDA of of offset plan XX% over by grew was accounts cash the the noise, from organic mitigated performance million free As year, or we received the by strong well year-over-year. as by XXXX Stepping maintenance

activity. Now investment Slide I'll X where to please our growth turn review

During Environmental organic waste. primarily including million regulated Solutions Covanta further invested XXXX growth expanding recovery we increased in medical opportunities metal projects into our $XX in and through business,

spend areas in similar expectation We paybacks. a an very expect into for years returns XXXX the attractive and have these to account larger discrete tend for next spend recurring this that to and but amount individually, appropriate small in These be projects. before taking quick few believe represents investments

projects, be will on the Marine Transfer line Station New in York City For the Manhattan. larger to come first MGS or

We $XX with for XXXX. spent balance was primarily spend XXXX of $XX expect already needed the come to service about additional half project on total second the transportation add first at in MTS. equipment this the to to during in million million

and TAPS a heard our have earlier, site from the out first to and investment you equipment permit received we Steve system. build As purchase commenced for

the differ. intend Earls spend XXXX XXXX million Newhurst. $XXX Gate. initial projects contributions in include front including the forecast. or approximately for represents $XX a does this $XX the We site construction Earls remaining investment is entry projects Earls commencement in million million. total and into for and not shown pipeline work UK XXXX, around Gate investment in at of and will on equity $XXX to into million we and yet $XX Gate our Note expect reach Overall, Once close premium spend four early full to but total other contribution Rookery million we of million profile of just for funding financial invested likely outlook development $XX through The Rookery, we UK expect XXXX. the here our these that equity update require Protos the projects, loaded, the on to to for We

operations. more the Protos during the Acquisition life likely be as We'll financial and of generally million the activity We totalled acquisition reach $XX over close. details will be these of backend Newhurst projects of expect Rookery XXXX construction primarily to ratable Beach while reflecting weighted. provide Palm

usual, we specific update this specific a and outlook take in as line As be transactions XXXX place. will it instead providing only for won’t

can other incremental here our activity relatively be highlighting limited that spend. will assets in also priorities. you However, would XXXX for investment proceeds they our provide acquisition sale that Please expect as note given we're capital funding

significantly During in XXXX, from $XXX sale a we the of monetized the project. XX% nearly most stake Dublin million

UK project to Slide to our over where an December XX, down turn At while XXXX, us debt not update any $XXX of Rookery, little from Newhurst. I'll on and GIG financial sheet. close These by paid to portion do million a balance premiums had December on a the proceeds expect billion to Looking sales XXXX. $XX listed exclusively include asset to was net XX, we Protos $X.X $XXX of reach will we equity help any million spend. provide million we fund when Please

investments for a a credit capital approximately ratio X.X our like continue the senior lower to was team a year covenant of treasury X.X had the at combined $X The entered EBITDA improve year half billion at which year-over-year, leverage roughly year XXXX revolver cost, our the opportunities extend Our from drive under our interest growth the to Remember for remain free times further ratio its to flat similar and available X.X times X.X turns by end At liquidity we've reduced we at ratios turn in consolidated to improve four structure. term these towards XXXX peak maturity X.X expectation expect flexibility from facility consolidated times of end and is that and than leverage our our profile, had At will which our EBITDA liquidity the XXXX. to planned year we end, and adjusted Considering down to as our was we metrics leverage long transactions goal nearly to times. be and levels. reduce time end, almost XXXX million. and XXXX. optimize adjusted times these in look continue our over important totaling forward. current our cash proactively of busy completing refinancing flow $XXX We'll three going

However, that is GIG in near term value attractive opportunities the the believe on shareholders we the term with balance best investment near-term path for for our on sheet. maximizing venture execute minimizes while our joint long to our impact

EBITDA please where I'll turn our talk about XXXX in to XX, initiating a outlook $XXX adjusted $XXX guidance of million. more detail. million for XXXX We're EBITDA Now Slide little adjusted for to

improvement in At further growth again range facility this towards previewed which driven discuss X% target this growth As net X%. headwind strong the net the midpoint should received outlook year-over-year lower contribute to of million by XXXX, recovery, from prices. year, proceeds increased results. $XX annual I’ll we waste of is Note $XX business end similar for is organic insurance EfW growth interruption quarter our be on in third Fairfax the is million this to call, expected our and production, of detail Organic XXXX in the to excluding commodities that to metal of shortly.

pricing comparison this Commodity to at expected again in year. top is the the year-over-year year. to we’d range above weigh from even insurance this come However, on or expect growth excluding Fairfax the

with to position. million on previously index lower prices payments the modestly $X or be to on prices expect our aluminum softer million scrap variability we based $XX from million year-over-year for outlook $XX open market a As prices. power discussed up and to Metals number by down expected based headwind are ferrous capacity represent about that for

of of six Palm will of operating we start recent sale Our Dublin XXXX. the of and about contribute XXX% New the MTS XXXX York the facility by of will incrementally be plant up XXXX. the Beach the partially contracts million for This $XX the City in since first XX% offset the owned in weeks investment

We Warren a including see headwinds facility. the optimization will fleet results to from few million shutdown efforts in also of XXXX the

as activities which other Steve company to reallocate discussed, these facilities will However the profitable benefit to the risk more reduce allow resources in longer will term. and us

lower as over again which transitions XXXX been small a will time. this primarily analyst client you've milestone. quite investor be headwind a net it's adjusted a no term debt represented After to longer following payments. million a long item material see headwind we if project EBITDA over Covanta, contractual of $XXX has an negative Lastly, due service or This

for somewhat I'd of proceeds in underlying will year. last is this growth To Overall increasing XXXX last year. will to of of collecting for balance guidance consistent EBITDA which recoveries planned were reimburse the the This and in moment XXXX the year Slide quarter delay outlook in masked implies XXXX likely insurance favorable. Before in typically be amounts so the and move a QX, interruption be had Also XXXX mention that that on, we quarter impact with by of plant of energy of I been benefit has portion have the would we've EBITDA effect, take like With XXXX. XXXX otherwise higher of us that this timing that in levels. Fairfax in XXXX XXXX adjusted comparing When year. if trend want XXXX season. we insurance to a XX, to adjusted insurance proceeds business quarter fire the us QX, in received outage first recap, prices owning experienced the related than XXX% for high full to million Dublin far the that for to the In to reducing the accounted of of the normal our a facility QX, XXXX first will at illuminate busy level lower maintenance remember than were earned XXXX in $XX had we results. operational historical at of insurance make fully

step have a simple occurred, of For received picture. in moving purposes with take the you downtime of XXXX this could discussion, the back different if XXXX into had a million $XX we

chart adjusted on trend growth the insurance and that are contract at in the as and than transitions. investments expect continue more for our see EBITDA proceeds, Looking you impact XXXX can has the which to timing adjusts consistently right, commodity organic our higher headwinds of offsetting which we been

a Now XXXX our XXXX. to to please free flow cash for walk guidance turn for XX Slide from

QX adjusted with flow range call. slight I'll and million conclude With We cash our year $XXX positive by we this and flow cash line EBITDA similar million to to by cash looking cash between in to the a CapEx $XXX which middle and flow is working primarily expect of XXXX. improvement to anticipated improved be this maintenance of lower our long in by flow $XXX free year cash earnings year-over-year term expect restating the grow preliminary million driven or getting on XXXX flow of target free free in comments decade. next capital from beyond sustainable flat XXXX annual

we’d this believe we continue and more over years demonstrate on are strategic key progress And Q&A. operator, initiatives successes. move the including target towards that UK like tangible goal. steps next blocks the path With clear as to building the that move few become forward to steady the to will we Our in to that

Operator

our And Tyler Instructions] the from Raymond from line comes of Brown [Operator first question James.

open. is line Your

Tyler Brown

guys. morning good Hey,

Steve Jones

Good morning, Tyler.

Tyler Brown

Hey.

about hey all this just reprice guys Brad, progress. solid to to three that couple year. of I next a the same-store the appreciate but years. pricing large for a say congrats merchant very X.X%. guidance X% contracts was exciting I you up But really curious know I'm ‘XX, the to all off five waste of you, First have see

to trying any pricing that been XXXX? but shorten reason to think same-store about baseline, reasonable really X% contract think You've is that there conceptually plus your lengths, even isn't to past

Brad Helgeson

that over. dynamics assumption. of think to we've that contracted particularly as to the the given X% ability I is repeatedly, substantially, as a reasonable price so roll we point out escalates talked about but contracts X.X%, you at in see inflation, markets The our portfolio move portion the

year look amount So and exceed overall, by demonstrating this expecting for to we'd that year. we're inflation last that, the

Steve Jones

and again this foreseeable a is lot driving north then programs for the to significantly continue continues and lot moving also drive moving our a waste, in along future. of particularly take-back Tyler, Regulated medical click see XX% business up, pricing to going the profile business drug pricing growth you're that's think and to year. waste that they'll it up I pretty Yes, there

Tyler Brown

Right.

Okay transitions energy until and XXXXs. this to on want that noise but at us, it big least And well, has mid contract I sure the sunset all good. are all behind the largely just at point have then side, virtually as I the make

impact XX moves is believe million given average rolling thing to X So that market any the hours and see to really piece so and reason the revenues, prices? in megawatt is will not a contracted price us that bucks hedge here that continue on around the only prices there you've already capacity basically

Steve Jones

that's Yes, at it. the way to look

Tyler Brown

a some or you operations stride to I in, can hit you running really sure Okay, perspective. hard changes us sure an last make the where And opportunity my wanted for initiatives of do to your still really that maybe guys from feels it's well, the improve? you but then coming you can fruit? about of really outside have despite just the one had that talk see it Steve, little think continuous then looking to there's from are appreciate for improvement bearing Fairfax I humming like off I'm And that.

Steve Jones

board least of day. the like every best about minute we've out stable Yes, you've and on so rolled your the the talk heard had operator me only you this before. on things operations At

And linear to smart just with to better there, and a now but with the you that more person person a model it's so, programming programming computer plant think the probably right? equipment efficient because need I run running sitting it's it model. run the than effective way if You also fact about mean the and the allow that

that's stable and the bit. So operation

but whole that rolled And yet. plants, out most we profitable taken the so to haven't we've biggest our really that fleet plants, to

improvement was So productivity actually this level past ever. year, gross highest at our continued the

on that plant since so - years the the of say just so apply the we operations you tools strike day. to in have I for plant problems door, starting every that in it walked take and these or them to at get day-to-day the been most the just we're three, hit and four out now to ability we've So

runway. pretty So there's a long

operational we at lot talk And operations all not it's here, about going plants? with we continue and years effective. years years where our around be Lean couple more a a to got tools Six it's our talk we operations think working able a it's make I of a sure we're lot of How do discipline now. lot to that disciplined Sigma of we've make

Tyler Brown

and Congratulations great. that's Yes, you. thank right. All

Steve Jones

Thanks.

Operator

of next Goldman the Lee comes from line Our from Sachs. question Brian

is Your open. line

Brian Lee

Good for taking Hey morning. guys, thanks questions. the

Steve Jones

morning. Good

Brad Helgeson

Good morning.

Brian Lee

A development the couple pipeline. me just from on UK

remind of into you the could today? bit off facility what the us first contracted Just status

Steve Jones

is Oh, locked so much waste that you couldn't how up, in well Brian. hear I

like up at, do make waste. to first XX we you projects I we've of has level that that out locked the you if to mean in know look on thing depends the the So the probably sure got it that's project. range access the each But, and plus go is that waste

companies, you capacity. if So tried need, landfill around what picking partner up eliminating look with on to to we've companies is need and waste capacity. that see at waste but access waste they good - is waste, trucks the do because the are The rolling you'll disposal they UK wheels getting and

to that's out Newhurst haulers, OE So Biffa thing at up couple local if that go that the it's and but up. waste you different locked at the do all look is there's and involved get Gate roughly then Earl's is the first a in way and Protos of

Brian Lee

to have just the there outcome about guess for ongoing financing, Okay, the of that. with any an region, Brexit issue, just the potential know that that been related debt financing And I appreciate that raising cost maybe thinking you're that's impact uncertainty situation? but in then or how I I the

Brad Helgeson

Hi Brian, it’s Brad.

else everybody this how waiting to like see know we're eager You plays out.

We haven't any it we in raise ability storing funding so the projects. don't to impact far for our seen base to real and impact expect

question implications everyone remains watching I else. just term like but the a we're UK and think yes, So for long the

Steve Jones

as you the weeks there's an Brexit move ago that to leaves continent and of waste that, was that, easily. things one respect with there's couple license roughly some a there tons to there's that the takes interesting or a need And the UK X.X article won't that in permit so the to and move that The million fact Guardian hard a

in played getting to it. Guardian so, this waste there caught what of kind were up And concerns in article the out and about the and happens system

could here. in be next with and couple, there go several be associated we plays out cons So how where Brexit could depending weeks the on there pros

Brian Lee

understood. Okay,

helpful context. that's Now

you sustain this dividend a in, your of years. But having that has I capital but you on I'll around question potential is investors priority strategy any pass you the over to option last toward of seems capital is a within it on have on. as facility? entertained this the get any start the shifts there the as point sort policy for the to the flexibility next there overall, stock, temporary flexibility still is maybe lean and capital me be to commit there question [indiscernible] then to again pipeline know as it's for few of at it time guys So particularly, the agenda UK time, how allocation to board but much that from to consider a like some closer to contention is

Steve Jones

dividend? look we to kind think don't change if there. formally a year. you're of policy at every dividend agree see December time, What committed but going in the of more Yes, the all I I to the

is like I debt EBITDA to higher our prepared remarks. in as frankly his adjusted pointed think people quite what Brad net hear out than you

have in the great We these projects UK. also

at XXXX and you're by projects focused debt least today, that at committed we be, I for well we adjusted that I'd on to see net and time as Board EBITDA not need much on net us, move but number all that's in are, on move move - to is advancing it. it accretive debt the it here. it'll like is XXXX of these number. So not to dividend in and least move say we're kind going What that our as we be we'll way I we're think EBITDA through That to to the to is down us our lost said we lost to range that going UK and the that's don't adjusted

Brad Helgeson

Yes in and we Brad. not I'll I us allocation paying back gone towards shareholders to the of opportunities that would be consequence a think to able had that us but have that's the Yes, it’s that of capital way the weighted capital is theory invest real policy just Brian, being in bit. happening. of to add in front

improve balance how strength year credit practically UK really were our the GIG our and our projects, saw sheet You able and with to most we to of structure strengthen finance very the this with capital refinance efficiently. partnership of

stand of opportunities. achieve near-term. we achieve. the So that set flow investment free payout the strengthening where the cash in versus making and continuing things we of because know think up sort notwithstanding to the up I both can we can payout doesn't think then where of things sure here dividend the We've optics set of we and our We in way

Brian Lee

guys. thanks right, All

Operator

of question Stifel. comes line from Michael Our from the next Hoffman

open. is line Your

Michael Hoffman

questions. Thanks gentlemen. the for morning Good

Steve Jones

morning. Good

Michael Hoffman

all you've we free to I starting X% you appreciate support to talk coming that the that's XXX XX in if where like that that the the of midpoint To have three about years, a ask you is Domestic think get to the at over waterfall, the question of before rate round from baseline of growth can of a got EBITDA. EBITDA about has the useful front UK, progression level, benefit growth next that? we how to think of XX cash You and I'd numbers you goal to hold love very and from so to we the waterfall or what to in high you context the X% Can in so organic us XXX. accomplish waterfalls, they're a today, grow think

Brad Helgeson

right. Yes, Michael exactly Brad. That's it's

plus So organic rate [indiscernible] beating we're we the to put repeat at looking for adjusting business. of that UK feel pretty insurance XXXX in that this year. it so or yes again look and the up X% at about hitting good of we second, growth X% a target for We've

waste strategy, point a X% too of the to metal grow spirit to improvement we've and continuous on its much is the obviously broadly. well and fine northeast, pillars it's recovery, X% and grow more things but opportunities markets plants from the the from how going the that’s talking of the of intention putting all in underlying the prices it's the waste as to dynamics as different into the about, plants, really think in the away that our been business brand I profile core come CES that it's in

question, in answer we're X% precisely for the a to that So future. we you that sure hitting probably lot doesn't know X% quiver will to foreseeable the if that your arrows but have I make of think we

Steve Jones

we good I pretty personally real about feel this. Yes, feel,

continuous pull think metals again you the things XX% business we this before, levers TAPS have out the that there, to waste, out. when at look I enough talked He more about we just of improvement recovery, Brad but CES is year. at some profile laid growing have well

funnel waterfall A you shape good $XXX So to respect free with or it I to put in of flow. that the real think we're as cash part it. million

Michael Hoffman

domestic about XXX just the it. you get then and the piece from to have to math is, the this of to take way right if think domestic get from need if X comes the I that kind development. XX XX And I X midpoint be yeah, And year other really I right. mean to simple That's at that clear, to

Steve Jones

exactly That's the way.

Brad Helgeson

about the way I'm that it. That's exactly thinking

Michael Hoffman

stabilizes progression steady and on X goal that I rising the four? very towards this Okay. X that UK down you to do of we helps total if some. we debt bit? it good a talk that comes about start can leverage we acknowledge ultimate up as the just or then, probably to need little ticks can And But mean then back temper do that

Brad Helgeson

lower exit expectation XXXX I than be on commented to projects see And the years. we right. UK wouldn't come really expect we Yes, the remarks, or said, in in three But minus, wouldn't the plus that improvement expect we lower, today. to as prepared as until isn’t being that's won't are that line be we we

target. be in long domestic be will that process, into working really should on going our growth but again to looking the we're it grow on I leverage UK thus look then think that down on towards that the certainly and accelerate coming business cash to and term based that the to with EBITDA, accelerate way us going flow, we're

Steve Jones

Yes, respects other growing lot ways of I where kind mean of it. we're into we to do on to want to. there's get a

see pushing selling think things You of the I those, times right? get little one projects, make of sense I've UK been underperforming us the and or this the balance four hard ultimately growth what we're lot but on a don't that's So that is sheet really us actually sell for assets assets assets into grow X% will the is us here. a to X% into we'll range bit kind of but

Michael Hoffman

X, to UK again its go But in back X before gradually take lists by and be clear then as X, then spend a it come starts probably that because money going to and markets working Nobody projects. the debt down that stabilizes should that's to but comes stride should way might alarmed to in some for are steps in be going more you on, aggressively. down little the

Steve Jones

directionally, thinking it. been about that's Yes, I've

think that's fair I a statement.

Michael Hoffman

Thanks. to know. need what I that's Okay,

Steve Jones

Thanks.

Operator

of from Oppenheimer. from comes the Kaye question Noah next Our line

Your is line open.

Noah Kaye

Steve, for fleet just question. domestic you the energy follow something waste let really optimizing Good Thanks morning. the taking me up around footprints. just mentioned on

kind it's McQuarrie you're that not they've just to prospect Presumably as are of between or folks that of asset [ph] Now UK any with wheel portfolio disambiguate bought with partnering well. assets that project. your final and companies? of of exchange are How the the operator course the optimize thinking two same for those sales Macquarie's about you the the swaps the the looking

Steve Jones

the that we mean, about our Florida. to it them get with some Palm in in I'm associated that. were plants interested reasons operate had kind that makes with because in mean number I was discussions with in - of spot sweet certainly I of cases of synergies most it. the we Beach sense was particularly one we

can we certain more they we might because where more than there existing cases and than got do be profitable operations in So areas operations. can of they've make facility their a

scrutiny to type any with that at look certainly have around we any swap. trust pass of So Obviously we them.

that's So always little tricky. a gets

Noah Kaye

talking cash impact more sheet. in that We're to the projects, followup cash understanding Right. on balance your to given around to your equity work to of the is sheet is question for It's that leverage. really project And on a not my Michael's then UK put correct? you net as question structure for maybe the JV the go balance debt about going the your those

Brad Helgeson

Yes, that's right, exactly yes.

Noah Kaye

Okay.

come on as may and be to you from as So actually projects those debt leverage you the line? upward to closer see muted somewhat be impact coming

Brad Helgeson

Yes, expectation. Certainly a three-year course that's of over our period. the construction

Noah Kaye

Okay.

Steve Jones

mentioned at that's think remarks. we’re his in in going this Brad times I different so prepared too, why

loaded, some we'll projects that loaded it's you and in little know mean bit so I it's some – back front ratable a it's Something in we're that some way. then manage

Noah Kaye

really, entail a projects bit of or little mentioned I would status else? you to in then a profile a question here legal specific to this the this Rookery appeal guess with precedents if that [indiscernible] anything And Steve, for like appeal possibly have with forward, similar or of way sort the you finding the to up the found air, move even is proceed in

Steve Jones

line There's we'll get in the is I comfortable it that on after other operating Yes, deal and at will looking operating also operation. our kind way risk. then ways of ultimately High in to I we're to an people permit November the risk. take until mean the The we is counsel bottom need the we're Court's mean, with see ruling don't it the pretty who permit. I talking

we of here all out. long a can time period got this sort during we've So construction where

where are permit who there ultimate people the risk. on operating So will depending without the see close they

Noah Kaye

will that over shouldn't event. 'XX could an much that so out course a into that. come this of from that your play earlier read is too this we timing 'XX, comment perspective end Okay, that than again the It

Steve Jones

will than earlier this is my and Yes, that come I'm expecting it current view.

Noah Kaye

it. much, very Yes. I Thanks appreciate

Steve Jones

problem. no Sure,

Operator

comes Markets. the from Our BMO of from next Capital question line Silber Jeff

Your line is open.

Jeff Silber

not construction commission forward, this the I going half second it's mean, I kind think financial what in on Thanks so do have going into impact you to TAPS. half much. year of year. first that'll the of business? next of focus, mentioned wanted But on the me, excuse your you

Steve Jones

So, now. of the million $X probably $X to first one million be EBITDA will

it we'll into quarter, we'll see My quarter the it'll start probably it, can view think the much we system, with it and current is, the get we second the We'll we'll how see be then as through to reconstruct commissioning upside the be things construct start of do some the Now equipment. now. heard. throughput because shake throughput with do third associated better out there'll I of that interesting I've from so end we'll to some

to So million kind is I X that point additional $X at - X our million $X this case think EBITDA. will of of to so base

Brad Helgeson

Yes, and Brad. then Jeff this is

value metal that up streams. really in Steve [indiscernible] model these of side that made fractions systems, particularly [ph] new non-ferrous on so small to case and move the cost theory at so high [ph], they're Looking disposal covered wsurfaced by with extent two a offsetting on investment disposal was wellington it's to. really, course based metal through is we the We've on based a the of cost it's not sidevaso alluding was of as three

the material fraction value and to construction So cost. recovery of course as which it's particularly heaven we as such offsetting disposal that haven't in is high non-ferrous cost that's of aggregate. of material third able are done metal small we're who things a not on disposal beneficially and reuse the that really the extent the Number side. To value on market reusable two

probably think not the commissioning some that or is only bigger development opportunity working to X market streams the is where model willing that running, X, term how here sense we So some the feel getting us based towards so to longer to and those have much out then kind it's see from it's year about is a for of we also of going a today. are back that that but They be time to we this again get to we to through even get the and what higher. X moving take standpoint, up inevitable better revenue kinks and half developing out period project can X of on

Jeff Silber

And last quarter. Right, BI give guidance the can have when on or this quarter? that last by great. remind during Thanks. And out unfortunately to cadence if I them got quarterly call the Is we seasonally there you the anything year? might of insurance be you've the proceeds, model from year know also you don't the different us insurance year

Brad Helgeson

Yes.

until I so mean around Dublin, Jeff, there were if for of year. Dublin So quarter, first you time close the slowdown recall last one the items, was couple this didn't

So Dublin million we about from just the the of of consolidation $X quarter. had first of contribution the beginning for

from will within wrap interruption Fairfax in standpoint with our million So for an business the fire. that anniversary collection $X call

As from think through we $XX million first in the you 'XX about look at another quarter we so course collected and the insurance. of move as the year-over-year XXXX as or you

movement, saw commented less I So year. we the through we a maintenance year. kind the XXXX into an but typical we trend. that's to of highlighting. last There year-over-year we comparatively, out wanted is for be of impact think as nothing it. less move to first something a on bit of should that that little prices is moving then flag but That's And in look also of worth energy strength quarter really

Jeff Silber

Thanks much. appreciate Okay, I that. so

Operator

comes from the question from next line of Baird. Kallo Ben Our

Your line is open.

Ben Kallo

horse, projects the put before lot a want don't you've I cart the got on. going of morning. Good to but

So tower I and here, so for level development know know doing easy you there just kind talk I of view the kind there? of team from projects wanted market on is thanks the next addressable of you my kind you could but what out that's to developing? of TAPS, future the overall any color then just guys are how about guys for And ivory

Steve Jones

waste looking projects looking we're other projects, UK, was working were projects so when in energy waste. from there's energy that at there's where to year going other in respect GIG more to development, XX probably I'd at With on Sure. five window more the year the There's so project UK say UK be needs probably, a to from projects. market we're other the there

four development projects rolling that are why earlier we'll outside the some and bring projects and these other phase, also end. mentioned the then There I So at forward. it US that's we'll very get there's

developments to story. business important growth international I think our

So may seen the in that have Philippines. you

from with awarded working are Quezon We've City. Macquarie energy Pacific. in the We waste and Metro plant been

North permits the that. we'll And, a potentially like up set to we're of its work all the are Manila participate area through and outside So a projects financing so be and there years will and on Asia working project. getting projects that but number way are that of few that going That in things take Southeast in. to

a lot there. an in So going you're see America. going some We've South on, activity uptick seen in think there's to I recently

years, kind tax, disposal of market yes start And was of size. a coming waste their the play UK of So do plants. we value creation on UK you're oh but these the if other into finishes focus next think is I UK see be the locations as for development disposable, going to what some lot focus. our to from going few We'll the of energy tax,

need facilities. So from five location. four plant acts this take will our maybe or on four facilities probably particular of another depending We'll

now, Ben those various is what can fleet spots looking at energy of regionally. facilities in the where we right site plants feed from waste doing they're we're what our we're So various whether and out then our

say little frankly really wider great there's take our our other is from another run fleet. through might I to this And then a be so maybe it's than to own that the ash round mother would facilities. is So, and facility what can this we source opportunities do there plus our start quite plant plants, out or four potentially

Ben Kallo

four of first got as is Dublin, it far of question Pipeline, sudden The was because all had XX announcement back guess cadence here. we you we I goes to just next first of And years. of just of development going it and the then years, on think the couple a be with then kind more a projects on projects to steady-state last as

Brad Helgeson

participate get pipeline new I largest plants and of growth mean, steady is projects because biggest that coming energy goal world part the to on. waste, development then the in waste invited company just we the that on from we're and or of to a my is in get more for kind have of of Yes, energy in the focus a projects. number

along new on it's little a as further earlier train jump are and we development. plants of a them moving growth the pipeline, going now development from But at goes somewhere energy we're that have steady-state of Some of we in so of look filling in time that on. kind to as more closely waste

Ben Kallo

Great, thank you.

Brad Helgeson

Thanks Ben.

Operator

Sutton from the our comes last question And of from line Moses Barclays.

is line Your open.

Moses Sutton

UK a on things IRRs assuming in projects at morning. Good of talk you're end by net the bit along expected [ph]? your construction Orlem Could continue to at the you about move each and time

Brad Helgeson

it's Yes, hi Brad. Moses,

equity by these into on we're contractual find risk the to we and at get looking to buttoned but standpoint a be I'm are investment. an way varies given looking projects IRRs not cash going mid This overall adjusted attractive. returns very low in we're project-by-project, from So those structured teens up to project. on the generally cash IRRs which

Moses Sutton

will be than it say Is say fair IRR Gate Earls issue you that it. Got Rookery? no with that have Rookery lower assuming to

Brad Helgeson

a is to is investment generally [indiscernible] Yes, higher yes, of a I reasons is first profitable that, more bigger. and I assumption of and foremost projects that's it one attractive more but couple are at course that's bear think the there for these fair size, return mean

to needs. the only Of size them market the we get course that

other I that's Rookery was Earls the we've general has the stepped our that the with gave partner IRR premium for at but expect Gate just Again a you project a with been better, plan So the target our pay nature will developing to again buy a would Rookery been Investment why we Group great a smaller, also a serve, profile in the speaking the developing. projects, better based partner return into to Green of generally that investment. arrangement bigger project. the is on the

and both return our on get we've return we'll development us. dollars Rookery nice our spent which a equity best help So in overall you that will sweat for

Moses Sutton

perhaps more of target throughout regarding you'd a you're you I'm to the yet? or that year. range if for I throughout mentioned the to And ‘XX not Got put sales Is it. know ‘XX, potential a asset number sure give detail Thanks. there XXXX. proceeds willing

Steve Jones

No not necessarily.

we couple have components it. So to of

that's mentioned process I are we one assets, here it some so hydro stations as early just We XXXX. awaiting So the one XXXX. that on closed selling, in part in another closed assets. We were are not in non-core There's those of three of the we’re transfer the closing the mentioned approval, of call, all monetizing either.

UK the line, off forward. be if GIG then come construction into be premiums into financial of quarters partnership those projects asset we earn rather projects we'll of we'll kind those move on by non-core and the as that in context selling move past as finishing sales down So reflecting and those we'll our

Beyond for that, have specific minds in open have assets mentioned, we eyes where that don’t but other sense returns make we us, hands. targets, and Steve as any capital for recycle better for opportunities can we open

forward So point. if we'll those opportunities move any just of refresh at that

Moses Sutton

color. Thanks. I appreciate the

Steve Jones

Thanks.

Operator

time. further call no over at questions turn Jones are back there Steve for to closing And the this will I remarks.

Steve Jones

Thank you us for joining today.

always participation interest. appreciate your we As and

progress this As and in our to an and forward of important and momentum. expect we look be months. Thank year to talking you we continuing real in XXXX seeing initiatives you strategic the again, coming to all discussed, we're making on

Operator

call. today's concludes this conference And

You may now disconnect.

Covanta Holding (CVA) 15 Feb 192018 Q4 Earnings call transcript