Covanta provides WtE update, discusses impacts of COVID-19
Covanta Holding Corp. provided a brief update of its waste-to-energy (WtE) projects and discussed the impact of the COVID-19 pandemic on its operations during a second quarter earnings call held July 31.
“Our business performed well in the second quarter under difficult circumstances,” said Stephen Jones, president and CEO of Covanta, in a statement. “Covanta adapted quickly to the emerging COVID-19 pandemic, implementing steps to protect employees, ensure continued reliable operations at our facilities, and reduce costs to mitigate financial impacts. Overall business conditions remain challenging and there remains significant macro uncertainty, but we have seen meaningful recovery in our core waste markets from the initial months of the crisis, which benefited results as we exited the quarter. Covanta is a resilient company, built on critical infrastructure and outstanding employees, and these unprecedented times highlight the underlying stability of our business.”
During the earnings call, Jones said that Covanta experienced limited operational disruptions from COVID-19 during the second quarter and was able maintain a steady flow of waste to its facilities.
The company took several steps during the quarter to reduce costs, including eliminating all non-essential travel, significantly reducing discretionary spend, enacting a corporate hiring freeze, temporarily reducing administrative sales and implementing a furlough program.
“These efforts enabled us to manage costs even as we saw an increase in COVID-19-related expenses,” Jones said. “As I sit here today, we’re in an environment where the waste volumes have improved meaningfully from the initial weeks of the pandemic. Our operations are steady, and we see limited near-term commodity volatility.”
Regarding Covanta’s WtE development projects in the U.K., Jones said the company is now in full constriction of three facilities. In addition, he said the Protos project is now in its final development phase, with financial close expected in late 2020.
Bradford Helgeson, chief financial officer of Covanta, said the company exercised an option during the second quarter to secure land where the Protos project will be built. The proposed 40 megawatt (MW) facility is being developed in partnership with Biffa near Cheshire, England. Once operational, the facility is expected to process 350,000 metric tons of waste annually.
Jones was also questioned on the potential for WtE developments in the U.S. During Covanta’s first quarter earnings call, held on May 8, Jones confirmed the company was in negotiations with a client in Pasco County, Florida, to support the potential expansion of their WtE plant.
During the second quarter earnings call held July 31, Jones said the company is in a sole sourcing discussion with Pasco County. He said Covanta is in the early stages of talking to them about what their expansion might look like. He also noted that there are several places around the U.S. where there is opportunity to expand WtE production as municipalities look at their 10-year waste plans.
“There’s a handful of these opportunities in the U.S.,” Jones said. “You will see us doing U.S. projects here over the next several years as these municipalities come to grips with their future solid waste programs.”
Covanta reported $454 million in revenue for the second quarter of 2020, down from $467 million during the same period of last year. Net loss was $13 million, down from a net loss of $21 million during the second quarter of 2019. Adjusted EBITDA was $96 million, up from $94 million.