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Covanta is a holding company, incorporated in Delaware in 1992 and engaged predominantly in the business of waste and energy services. Covanta is one of the world’s largest owners and operators of infrastructure for the conversion of waste to energy (known as “energy-from-waste” or “EfW”). The company owns and operates related waste transport and disposal and other renewable energy production businesses.

Covanta´s EfW facilities earn revenue from both the disposal of waste and the generation of electricity or steam, as well as from the sale of metal recovered during the EfW process. The company processes approximately 22 million tons of solid waste annually. With 44 EfW facilities, which are primarily located in North America, Covanta produces approximately 10 million megawatt hours (“MWh”) of electricity annually. Outside of North America, the company operates and has equity interests in EfW projects in Ireland, Italy and the United Kingdom (currently in development or under construction).

Covanta´s EfW projects generate revenue primarily from three sources: fees charged for operating facilities or processing waste received; the sale of electricity or steam; the sale of ferrous and non-ferrous metals that are recovered from the waste stream as part of the EfW process.

In December 2017, Covanta entered into an arrangement with GIG, a subsidiary of Macquarie Group Limited, to develop, fund and own EfW projects in the UK and Ireland on a 50 to 50 basis. In February 2018, GIG invested in Covanta´s Dublin EfW facility, acquiring 50% ownership for €136 million, while Covanta retained a 50% equity interest, through a joint venture.

In December 2018, financial close was reached on a second project, the Earls Gate Energy Centre project ("Earls Gate"), an EfW facility to be constructed in Grangemouth, Scotland. Covanta and GIG together will hold a 50% equity ownership with co-investor and developer Brockwell Energy owning the remaining 50% stake. The Earls Gate facility is expected to commence operations in 2021.

In 2018 Covanta acquired one environmental services business located in Toronto, Canada for approximately $4 million to expand businesses in Canada, and the Palm Beach Resource Recovery Corporation ("PBRRC") for $46 million to operate and maintain two EfW facilities located in Palm Beach County, Florida.

In 2019 the company will commence construction of its first Total Ash Processing System located in Fairless Hills, Pennsylvania. Operational start-up is expected in the second half of 2019.

According to the Annual Financial Report total revenue of the Company increased by $116 million (+ 6.6%) to $1,868 million in 2018 from $1,752 million in 2017. In 2016 total revenue of the company amounted to $1,699 million. Waste and service revenue grew by $96 million (+ 7.8%) in 2018, to $1,327 million from $1,231 million in 2017, primarily driven by $72 million of organic growth, the start-up of the Dublin EfW facility at the end of 2017, and the acquisition of the Palm Beach County EfW facility operating contracts in 2018. Within organic growth, EfW tip fee revenue increased due to higher volume processed ($38 million), primarily from a full period of operations at the Fairfax County EfW facility, which had not been operating for most of 2017, higher average revenue per ton ($20 million), and growth in environmental services ($12 million) and municipal services ($13 million).

Energy revenue increased by $9 million or by 2.7%, from $334 million in 2017 to $343 million in 2018, driven by a $25 million increase from higher production at EfW facilities as compared to the previous year, primarily due to the Fairfax facility.

Recycled metals revenue increased by $13 million or by 15.9% from $82 million in 2017 to $95 million in 2018, driven primarily by higher pricing for both ferrous ($5 million) and non-ferrous ($5 million) material and an increase in ferrous volume ($6 million), primarily due to a full year of operations at the Fairfax facility.

Plant operating expenses increased by $50 million or by 3.8% from $1,271 million in 2017 to $1,321 million in 2018, primarily due to costs related to growth in Covanta´s Environmental Solutions business ($11 million) and metal processing operations ($6 million), escalation of EfW same store expenses ($18 million), the start-up of the Dublin EfW facility in the fourth quarter of 2017 ($15 million), and the acquisition of the Palm Beach County EfW facility operating contracts in the third quarter of 2018 ($15 million), offset by contract transitions ($11 million). General and administrative expenses increased by $3 million, primarily due to an increase in compensation expense of $7 million.

As a result of the increased plant operating expenses and impairment charges of $86 million in 2018 compared to $2 million in 2017, the operating income of Covanta decreased by $38 million or by 38%, from $101 million in 2017 to $ 63 million in 2018. However, the net income increased by $105 million or by 202% from $52 million in 2017 to $157 million in 2018 from the sale of business in 2018. In 2016 the net income of the Company amounted to a loss of $4 million.

Adjusted EBITDA amounted to $457 million in 2018 compared to $408 million in 2017, an increase of $49 million or 9%.

Net cash provided by operating activities for the year 2018 decreased by $4 million from $242 million in 2017 to $238 million in 2017. The net decrease was due to a net cash outflow related to changes in working capital, primarily accounts payable.

Net cash used in investing activities for the year 2018 decreased by $150 million compared to the year 2017. The net decrease in cash used was attributable principally to proceeds received from the sale of 50% of Covanta´s Dublin EfW facility in 2018, as well as reduced purchases of property plant and equipment, primarily related to the construction of the Dublin EfW facility which was completed in the third quarter of 2017.

Net cash used in financing activities for the year 2018 increased by $229 million compared to 2017 due to the repayment of borrowings under a Revolving Credit Facility, with the proceeds from the sale of 50% of Dublin EfW facility as noted above, as well as decreased net borrowings related to the construction of the Dublin EfW facility.

In 2019 and beyond, the company expects that its financial results will be affected by several factors, including: market prices, new contracts, new project development and construction, acquisitions, and the organic growth of earnings and cash flow generated by existing assets. In order to drive organic growth, Covanta will be focused on growing its environmental services and profiled waste businesses, enhanced metals recovery and centralized processing, ash management, continuous improvement using Lean Six Sigma concepts, and managing facility production and operating costs.