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Covanta Holding CEO Discusses Q3 2011 Results - Earnings Call Transcript

With that, I’d like to turn the call over to our president and CEO, Tony Orlando. Tony?

Tony Orlando

Thanks, Alan, and good morning, everyone.

Let’s begin with a quick summary of the third quarter. For those of you using the Web deck, please turn to slide three. It was another solid quarter and our results were in line with expectations. Compared to the third quarter of 2010, operating revenue was up 7%, adjusted EBITDA was up 1%, free cash flow was up 12%, and adjusted EPS was flat.

I’m quite pleased with these results, which Sanjiv will discuss in detail. Our energy-from-waste business continues to perform well even in the face of a sluggish economy. We continue to generate predictable cash flow which we’re utilizing to deliver on our commitment to return capital to shareholders. In addition to the regular dividend during the third quarter, we used $81 million to buy back stock. Since the program began last summer, we have now repurchased 12% of our shares.

Before I go on, I want to pause for a moment to highlight our team’s outstanding work in dealing with Hurricane Irene, which swept through the Northeast in late August. Its path affected half of our facilities. It even hit our corporate office, taking out power for several days, but we didn’t miss a beat.

We had no (inaudible) recordable accidents, we provided uninterrupted services and we accepted all contracted waste delivered to us. This is really phenomenal and it exemplifies the operating expertise that clients expect of us and that we deliver day in and day out.

From our financial perspective, the net impact was insignificant. As you can imagine, we had a lot of wet waste delivered to our facilities, which increased the tons we processed, but also lowered energy production. Also, due to safety precautions and downed power lines, utilities weren’t able to accept all the electricity we could have produced. Therefore, we had to curtail and, in some cases, suspend energy sales. So the net impact of Hurricane Irene was slightly higher waste revenue offset by slightly lower energy revenue, and operations continued right on track. Again, this points to the quality of our team and the predictability of our business.

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